Biopolymer microgels present many opportunities in biomedicine and tissue engineering. To understand their in vivo behavior in therapeutic interventions, long-term monitoring is critical, which is usually achieved by incorporating fluorescent materials within the hydrogel matrix. Current research is limited due to issues concerning the biocompatibility and instability of the conventional fluorescent species, which also tend to adversely affect the bio-functionality of the hydrogels. Here, we introduce a microfluidic-based approach to generate nitrogen-functionalized graphene quantum dot (NGQD) incorporated gelatin methacryloyl (GelMA) hydrogel microspheres, capable of long-term monitoring while preserving or enhancing the other favorable features of 3D cell encapsulation. A multilayer droplet-based microfluidic device was designed and fabricated to make monodisperse NGQD-loaded GelMA hydrogel microspheres encapsulating skeletal muscle cells (C2C12). Control over the sizes of microspheres could be achieved by tuning the flow rates in the microfluidic device. Skeletal muscle cells encapsulated in these microgels exhibited high cell viability from day 1 (82.9 ± 6.50%) to day 10 (92.1 ± 3.90%). The NGQD-loaded GelMA microgels encapsulating the cells demonstrated higher metabolic activity compared to the GelMA microgels. Presence of sarcomeric α-actin was verified by immunofluorescence staining on day 10. A fluorescence signal was observed from the NGQD-loaded microgels during the entire period of the study. The investigation reveals the advantages of integrating NGQDs in microgels for non-invasive imaging and monitoring of cell-laden microspheres and presents new opportunities for future therapeutic applications.