A broad range of medical devices initiate an immune reaction known as the foreign body response (FBR) upon implantation. Here, collagen deposition at the surface of the implant occurs as a result of the FBR, ultimately leading to fibrous encapsulation and, in many cases, reduced function or failure of the device. Despite significant efforts, the prevention of fibrotic encapsulation has not been realized at this point in time. However, many next-generation medical technologies including cellular therapies, sensors and devices depend on the ability to modulate and control the FBR. For these technologies to become viable, significant advances must be made in understanding the underlying mechanism of this response as well as in the methods modulating this response. In this review, we highlight recent advances in the development of materials and coatings providing a reduced FBR and emphasize key characteristics of high-performing approaches. We also provide a detailed overview of the state-of-the-art in strategies relying on controlled drug release, the surface display of bioactive signals, materials-based approaches, and combinations of these approaches. Finally, we offer perspectives on future directions in this field.