Microfluidic devices are beneficial in miniaturizing and multiplexing various cellular assays in a single platform. Chondrogenesis is known to pertain to chemical, topographical, and mechanical cues in the microenvironment. Mechanical cues themselves have numerous parameters such as strain magnitude, frequency, and stimulation time. Effects of different strain magnitudes on the chondrogenic differentiation of adult stem cells have not been explored thoroughly. Here, a new multilayer microdevice is presented for the unidirectional compressive stimulation of cells in a three-dimensional cell culture. Numerical simulations were performed to evaluate and optimize the design. Results showed a favorable highly uniform axial strain distribution and negligible radial and circumferential strain for the optimized design. Moreover, an experimental study was performed on rabbit adipose-derived stem cells encapsulated in-situ in alginate hydrogel. Strain levels of 20%, 15%, 10%, 5%, and 0% were studied simultaneously on a microfluidic platform. Dynamic mechanical compression positively influenced cellular viability and upregulated collagen II, Sox-9, and aggrecan expression in the absence of exogenous growth factors. The expression of collagen type II as specific marker for articular chondrocytes was further confirmed by immunofluorescence staining of collagen type II. Taking together, 10% strain can be considered as optimal stimulation factor for chondrogenic differentiation of adipose derived stem cells. © 2017 Elsevier Ltd