Transplantation of encapsulated living cells is a promising approach for the treatment of a wide variety of diseases. Bioactive glass (bioglass) can be used for drug delivery and other regenerative medicine applications. First of all, we established a scenario of bioglass-incorporated alginate encapsulation. Then we studied the expansion of encapsulated murine embryonic stem cells (mESCs) in bioreactors with exposure to 70s bioglass. Finally, an integrated osteogenic differentiation of encapsulated mESCs with the presence of 70s bioglass was investigated. The proliferation and viability of mESCs which had been encapsulated with 70s bioglass was enhanced compared to the regular control and bioglass-conditioned medium culture group. Embryoid body (EB) formation assessment demonstrated the undifferentiated pluripotency of dissociated mESCs. However, no significant difference was observed between the bioglass-incorporated encapsulation group, the bioglass-conditioned medium culture group and the control in terms of expression-specific osteogenic markers. Therefore, the 70s bioglass particles could be incorporated into the integrated bioprocessing of mESCs in 3D bioreactors, which is applicable to bone tissue engineering, such as in diseased or damaged bone restoration. These findings have potential implications and applications for tissue engineering where bioglass substrates could be used for the production of bioengineered bone both in vitro and in vivo. In addition, it would be possible to inject the mineralized tissue-filled and bioglass-incorporated alginate hydrogels directly into the defect area. Copyright © 2008 John Wiley & Sons, Ltd.