Calcium phosphate cement (CPC) can conform to complex cavity shapes and set in situ to form bioresorbable hydroxyapatite. The aim of this study was to introduce cell-encapsulating alginate hydrogel beads into CPC and to improve the mechanical properties using chitosan and fiber mesh reinforcement. Because the CPC setting was harmful to the MC3T3-E1 osteoblast cells, alginate was used to encapsulate and protect the cells in CPC. Cells were encapsulated into alginate beads, which were then mixed into three pastes: conventional CPC, CPC-chitosan, and CPC-chitosan-mesh. After 1 day culture inside the setting cements, there were numerous live cells and very few dead cells, indicating that the alginate beads adequately protected the cells. Cell viability was assessed by measuring the mitochondrial dehydrogenase activity, using a Wst-1 colorimetric assay. Absorbance at 450 nm (arbitrary units) (mean +/- SD; n = 5) was 1.36 +/- 0.41 for cells inside conventional CPC, 1.29 +/- 0.24 for cells inside CPC-chitosan composite, and 0.73 +/- 0.22 for cells inside CPC-chitosan-mesh composite. All three values were similar to 1.00 +/- 0.14 for the control with cells in beads in the cell culture medium without any CPC (Tukey's at p = 0.05). Flexural strength for conventional CPC containing cell-encapsulating beads was 1.3 MPa. It increased to 2.3 MPa when chitosan was incorporated. It further increased to 4.3 MPa with chitosan and the reinforcement from one fiber mesh, and 9.5 MPa with chitosan and three sheets of fiber mesh. The latter two strengths matched reported strengths for sintered porous hydroxyapatite implants and cancellous bone. In summary, cell-encapsulated-alginate-CPC constructs showed favorable cell viability. The use of chitosan and mesh progressively improved the mechanical properties. These strong, in situ hardening, and cell-seeded hydroxyapatite cements may have potential for bone tissue engineering in moderate stress-bearing applications.