The utility of alginate hydrogels for three-dimensional (3-D) culture of mouse embryonic stem cells (mESCs) and future development of 3-D stem cell culture-based in vitro screens of toxicity is described. Using alginate hydrogels of various stiffness, we first evaluated the impact of substrate modulus on mESC viability, proliferation, as well as expression of pluripotency and germ-layer markers and observed that low concentration alginate hydrogels (0.5% and 1% alginate) were most suitable for long-term culture of mESCs. These results were not unique to mESCs; long-term viability and proliferation of mouse embryonic carcinoma cells (mECCs) was also best supported by similar conditions. Finally, we determined cytotoxic responses of alginate encapsulated cells to commercially available chemicals and interestingly observed similar responses for mESCs and mECCs, thereby suggesting that mECCs can predict stem cell responses to chemicals. These studies will facilitate future design of optimal stem cell-based platforms of organ-specific and developmental toxicity. © 2015 American Institute of Chemical Engineers AIChE J, 61: 3180–3184, 2015