Microencapsulating stem cells in injectable microbeads can enhance delivery and localization, but their ability to act as growth factor production sources is still unknown. To address this concern, growth factor mRNA levels and production from alginate microbeads with encapsulated human adipose stem cells (ASC microbeads) cultured in both growth and chondrogenic media (GM and CM) were measured over a two week period. Human ASCs in microbeads were either commercially purchased (Lonza) or isolated from six human donors and compared to human ASCs on tissue culture polystyrene (TCPS). The effects of crosslinking and alginate compositions on growth factor mRNA levels and production were also determined. Secretion profiles of IGF-I, TGF-β3 and VEGF-A from commercial human ASC microbeads were linear and at a significantly higher rate than TCPS cultures over two weeks. For human ASCs derived from different donors, microencapsulation increased pthlh and both IGF-I and TGF-β3 secretion. CM decreased fgf2 and VEGF-A secretion from ASC microbeads derived from the same donor population. Crosslinking microbeads in BaCl2 instead of CaCl2 did not eliminate microencapsulation's beneficial effects, but did decrease IGF-I production. Increasing the guluronate content of the alginate microbead increased IGF-I retention. Decreasing alginate molecular weight eliminated the effects microencapsulation had on increasing IGF-I secretion. This study demonstrated that microencapsulation can enhance chondrogenic growth factor production and that chondrogenic medium treatment can decrease angiogenic growth factor production from ASCs, making these cells a potential source for paracrine factors that can stimulate cartilage regeneration.