Because of the limitations imposed by traditional two-dimensional (2D) cultures, biomaterials have become a major focus in neural and tissue engineering to study cell behavior in vitro. 2D systems fail to account for interactions between cells and the surrounding environment; these cell−matrix interactions are important to guide cell differentiation and influence cell behavior such as adhesion and migration. Biomaterials provide a unique approach to help mimic the native microenvironment in vivo. In this study, a novel microfluidic technique is used to encapsulate adult rat hippocampal stem/ progenitor cells (AHPCs) within alginate-based fibrous hydrogels. To our knowledge, this is the first study to encapsulate AHPCs within a fibrous hydrogel. Alginate-based hydrogels were cultured for 4 days in vitro and recovered to investigate the effects of a 3D environment on the stem cell fate. Post recovery, cells were cultured for an additional 24 or 72 h in vitro before fixing cells to determine if proliferation and neuronal differentiation were impacted after encapsulation. The results indicate that the 3D environment created within a hydrogel is one factor promoting AHPC proliferation and neuronal differentiation (19.1 and 13.5%, respectively); however, this effect is acute. By 72 h post recovery, cells had similar levels of proliferation and neuronal differentiation (10.3 and 8.3%, respectively) compared to the control conditions. Fibrous hydrogels may better mimic the natural micro-environment present in vivo and be used to encapsulate AHPCs, enhancing cell proliferation and selective differentiation. Understanding cell behavior within 3D scaffolds may lead to the development of directed therapies for central nervous system repair and rescue.