Biophysical properties of the cellular microenvironment, including stiffness and geometry, influence cell fate. Recent findings have implicated geometric confinement as an important regulator of cell fate determination. Our understanding of how mechanical signals direct cell fate is based primarily on two-dimensional (2D) studies. To investigate the role of confinement on stem cell fate in three-dimensional (3D) culture, we fabricated a single cell microwell culture platform and used it to investigate how niche volume and stiffness affect human mesenchymal stem cell (hMSC) fate. The viability and proliferation of hMSCs in confined 3D microniches were compared with the fate of unconfined cells in 2D culture. Physical confinement biased hMSC fate, and this influence was modulated by the niche volume and stiffness. The rate of cell death increased, and proliferation markedly decreased upon 3D confinement. We correlated the observed differences in hMSC fate to YES-associated protein (YAP) localization. In 3D microniches, hMSCs displayed primarily cytoplasmic YAP localization, indicating reduced mechanical activation upon confinement. These results demonstrate that 3D geometric confinement can be an important regulator of cell fate, and that confinement sensing is linked to canonical mechanotransduction pathways.