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Human articular chondrocytes lose their native phenotype when expanded in traditional monolayer cultures. As a consequence, hydrogel encapsulation has been investigated as a means to maintain the natural phenotype. Alginate has been widely used for cartilage engineering as it has been shown to enable the recovery of a native collagen type II expressing chondrocyte phenotype. This study has evaluated whether the capacity of the materials to maintain/revert the phenotype is due to the composition of the material or the physical entrapment provided by the gel. To achieve this, an alginate “fluid gel” (a shear-thinning structured gel system) was produced of identical chemistry to a traditionally gelled alginate structure. Both were seeded with passaged primary human articular chondrocytes. Chondrocytes in quiescent alginate showed the recovery of the native phenotype and a spherical morphology. Chondrocytes in alginate fluid gel were unable to maintain the recovered phenotype despite having a spherical morphology and were shown to have a lower level of entrapment than those in quiescent alginate. These findings indicate that geometric entrapment is essential for the maintenance of a recovered chondrocyte phenotype in alginate.