Tissue engineering is an alternative method for articular cartilage repair. Mechanical stimulus has been found to be an important element to the healthy development of chondrocytes and maintenance of their native phenotype. To enhance nutrient transport and apply mechanical stress, we have developed a novel bioreactor, the tubular perfusion system (TPS), to culture chondrocytes in three-dimensional scaffolds. In our design, chondrocytes are encapsulated in alginate scaffolds and placed into a tubular growth chamber, which is perfused with media to enhance nutrient transfer and expose cells to fluid flow. Results demonstrate that TPS culture promotes the proliferation of chondrocytes compared to static culture as shown by DNA content and histochemical staining. After 14 days of culture, low messenger RNA expression of proinflammatory and apoptotic markers in TPS bioreactor culture confirmed that a flow rate of 3 mL/min does not damage the chondrocytes embedded in alginate scaffolds. Additionally, cells cultured in the TPS bioreactor showed increased gene expression levels of aggrecan, type II collagen, and superficial zone protein compared to the static group, indicative of the emergence of the superficial zone specific phenotype. Therefore, the TPS bioreactor is an effective means to enhance the proliferation and phenotype maintenance of chondrocytes in vitro.