Differentiation of human embryonic stem cells (hESCs) can be instigated through the formation of embryo-like aggregates in suspension, termed human embryoid bodies (hEBs). Controlling cell aggregation and agglomeration during hEBs formation has a profound effect on the extent of cell proliferation and differentiation. In a previous work, we showed that control over hEBs formation and differentiation can be achieved via cultivation of hESC suspensions in a rotating bioreactor system. We now report that hEBs can be generated directly from hESC suspensions within three-dimensional (3D) porous alginate scaffolds. The confining environments of the alginate scaffold pores enabled efficient formation of hEBs with a relatively high degree of cell proliferation and differentiation; encouraged round, small-sized hEBs; and induced vasculogenesis in the forming hEBs to a greater extent than in static or rotating cultures. We therefore conclude that differentiation of hEBs can be induced and directed by physical constraints in addition to chemical cues.