We examined the respective influence of a sequential or a continuous hypoxia during expansion and transforming growth factor beta 1-driven chondrogenic differentiation of human bone marrow mesenchymal stem cells (MSCs). The differentiation was performed within alginate beads, a classical tool for the implantation of MSCs within the joint. The standard normoxic 2D (expansion) and 3D (differentiation) MSCs cultures served as reference. To determine the quality of chondrogenesis, we analyzed typical markers such as type II and X collagens, SOX9, COMP, versican, and aggrecan mRNAs using polymerase chain reaction and we assessed the production of type II collagen and hypoxia-inducible factor (HIF)-1α by histological stainings. We simultaneously assessed the expression of osteogenic mRNAs (Alkaline Phosphatase, RUNX2, and Osteocalcin) and the presence of micro-calcifications by Alizarin red and Raman spectroscopy. Chondrogenic differentiation is clearly improved by hypoxia in 3D. Best results were obtained when the entire process, that is, 2D expansion and 3D differentiation, was performed under continuous 5% hypoxic condition. In addition, no calcification (hydroxyapatite, proved by RAMAN) was observed after 2D hypoxic expansion even in the case of a normoxic differentiation, in contrast with controls. Finally, a better chondrogenic differentiation of human MSCs is achieved when a reduced oxygen tension is applied during both expansion and differentiation times, avoiding in vitro osteogenic commitment of cells and subsequently the calcification deposition.