Osteoarthritis (OA) is the most common inflammatory joint disease and currently lacks an effective curative treatment. Intra-articular injection of mesenchymal stromal cells (MSCs) has gained attention as a relevant therapeutic approach for OA treatment due to the MSC’s ability to secrete anti-inflammatory and immunomodulatory factors. Given their limited viability post-intraarticular injection and the potential leakage of cells out of the injection site, encapsulating MSCs in hydrogels is considered a promising strategy to protect them and provide a suitable 3D microenvironment to support their biological activities. Calcium-cross-linked alginate hydrogels are commonly used for MSC encapsulation, but their long-term in vivo stability remains uncertain. On the other hand, alginate cross-linking by the strain-promoted azide-alkyne cycloaddition (SPAAC) reaction would create a network unaffected by an ionic environment. Hence, this study aimed to develop an alginate-based hydrogel cross-linked via stable and cytocompatible covalent bonds for cell encapsulation. We established for the first time the formation of covalent alginate hydrogels between two SPAAC precursors, namely alginate-BCN and alginate-N 3 . These hydrogels exhibited in vitro stability and enabled the diffusion of molecules of interest. We then generated alginate-based SPAAC microgels of 170 μm in mean diameter, suitable for intra-articular injection. We next encapsulated human adipose MSCs (hASCs) in these alginate-based SPAAC microgels and confirmed their cytocompatibility, with over 90 % of cells remaining viable after 14 days in culture. Finally, the microencapsulated hASCs maintained their biological properties and were able to secrete anti-inflammatory factors (IDO, PGE2, and HGF) when exposed to pro-inflammatory cytokines (TNF-α and IFN-γ). In the end, human activated lymphocytes were cultured in contact with microencapsulated hASCs, and CD3+ T cell proliferation was quantified by flow cytometry. We demonstrated that the encapsulation process did not impair the hASC immunomodulatory activity. Overall, our findings show the potential of alginate-based SPAAC hydrogels for microencapsulating hASCs for cell therapy.