Cartilage engineering remains a challenge due to the difficulties in creating an in vitro functional implant similar to the native tissue. An approach recently explored for the development of autologous replacements involves the differentiation of stem cells into chondrocytes. To initiate this chondrogenesis, a degree of compaction of the stem cells is required; hence, we demonstrated the feasibility of magnetically condensing cells, both within thick scaffolds and scaffold-free, using miniaturized magnetic field sources as cell attractors. This magnetic approach was also used to guide aggregate fusion and to build scaffold-free, organized, three-dimensional (3D) tissues several millimeters in size. In addition to having an enhanced size, the tissue formed by magnetic-driven fusion presented a significant increase in the expression of collagen II, and a similar trend was observed for aggrecan expression. As the native cartilage was subjected to forces that influenced its 3D structure, dynamic maturation was also performed. A bioreactor that provides mechanical stimuli was used to culture the magnetically seeded scaffolds over a 21-day period. Bioreactor maturation largely improved chondrogenesis into the cellularized scaffolds; the extracellular matrix obtained under these conditions was rich in collagen II and aggrecan. This work outlines the innovative potential of magnetic condensation of labeled stem cells and dynamic maturation in a bioreactor for improved chondrogenic differentiation, both scaffold-free and within polysaccharide scaffolds.