Alginate was shown to be a suitable support for entrapment and cultivation of chondrocytes and bone marrow stromal cells, which under appropriate in vitro conditions synthesized cartilaginous components. The main limitation in these cultures may be low rates of mass transport through the alginate matrix governed by diffusion. In this study, we have designed and utilized a bioreactor system based on a packed bed of alginate beads with immobilized chondrogenic cells. Continuous medium perfusion provided convective mass transport through the packed bed, while small diameters of beads (2.5 mm and down to 500 μm) ensured short diffusion distances to the immobilized cells. During up to 5 weeks of cultivation, the cells synthesized extracellular matrix components merging beads together and indicating potentials of this system for precise regulation of the cellular microenvironment in cartilage tissue engineering.