A mechanism is described for facilitating dynamic capsule generation and recovery in computing environments according to one embodiment. A method of embodiments, as described herein, includes accessing a current firmware and a capsule driver binary file (“capsule file”) from a storage device, and merging the current firmware with the capsule file and a capsule header into a capsule payload. The method may further include assigning a security protocol to the capsule payload to ensure a secured capsule payload, and storing the secured capsule payload at the storage device for subsequent updates.