The stability of non-esterified carotenoids and carotenoid esters in paprika and chilli powder as affected by various processing treatments and storage conditions were studied. For this purpose, freshly harvested chilli and paprika pods were minced, immediately heated at 80, 90 and 100 °C for 5 and 10 min, respectively, and lyophilised. Alternatively, thermal treatment prior to mincing was applied. Processing resulted in a 25–34% loss of the initial carotenoid contents in chilli and 20–53% in paprika. Degradation of individual non-esterified carotenoids, mono- and diesters was monitored, generally showing an increased processing stability of mono- and diesters compared to their non-esterified counterparts. Capsanthin, capsorubin, zeaxanthin and β-cryptoxanthin mono- and diesters esterified with saturated fatty acids displayed similar stabilities, whereas susceptibility of the non-esterified pigments to degradation differed considerably. During storage over 4 months at ambient temperature pigment contents dropped by 16.7 and 9.6% in chilli and by 39.7 and 38.8% in paprika powders with and without illumination, respectively.