Embryonic stem (ES) cells are pluripotent cells with great potential in regenerative medicine. However, controlling their differentiation toward homogeneous lineages is challenging. In this study, we aim to investigate the effects of reconstituted 3D collagen matrix on the fates of mouse ES (mES) cells before and after induction for chondrogenic differentiation. Specifically, mES cells were encapsulated and cultured in 3D collagen microspheres and exposed to induction signals at different time points. Growth characteristics and differentiation status of mES cells were then evaluated. Collagen microspheres provided a suitable microenvironment supporting mES cell growth and maintaining their undifferentiated status for certain period of time. At later time points, the proportion of undifferentiated mES cells gradually decreased, accompanied by increasing proportions of mesenchymal progenitor cells. This suggests the inductive role of collagen matrix in differentiating mES cells toward mesenchymal lineages. Moreover, a lower initial collagen monomer concentration facilitated the differentiation of mES cells into chondrogenic lineages, while induction at a later time point associated with a more advanced stage of chondrogenic differentiation. This indicates that both the initial collagen concentration and the time to induce differentiation significantly affected the fates of mES cells. This study contributes to future development of ES cell-based therapies.