Organ printing is a novel concept recently introduced in developing artificial three-dimensional organs to bridge the gap between transplantation needs and organ shortage. One of the major challenges is inclusion of blood-vessellike channels between layers to support cell viability, postprinting functionality in terms of nutrient transport, and waste removal. In this research, we developed a novel and effective method to print tubular channels encapsulating cells in alginate to mimic the natural vascular system. An experimental investigation into the influence on cartilage progenitor cell (CPCs) survival, and the function of printing parameters during and after the printing process were presented. CPC functionality was evaluated by checking tissue-specific genetic marker expression and extracellular matrix production. Our results demonstrated the capability of direct fabrication of cell-laden tubular channels by our newly designed coaxial nozzle assembly and revealed that the bioprinting process could induce quantifiable cell death due to changes in dispensing pressure, coaxial nozzle geometry, and biomaterial concentration. Cells were able to recover during incubation, as well as to undergo differentiation with high-level cartilage-associated gene expression. These findings may not only help optimize our system but also can be applied to biomanufacturing of 3D functional cellular tissue engineering constructs for various organ systems.