The culture of tumor cell lines in three-dimensional scaffolds is considered to more closely replicate the in vivo tumor microenvironment than the standard method of two-dimensional cell culture. We hypothesized that our method of encapsulating and maintaining viable and functional pancreatic islets in agarose-agarose macrobeads (diameter 6-8 mm) might provide a novel method for the culture of tumor cell lines. In this report we describe and characterize tumor colonies that form within macrobeads seeded with mouse renal adenocarcinoma cells. Approximately 1% of seeded tumor cells survive in the macrobead and over several months form discrete elliptical colonies appearing as tumor cell niches with increasing metabolic activity in parallel to colony size. The tumor colonies demonstrate ongoing cell turnover as shown by BrdU incorporation and activated caspase-3 and TUNEL staining. Genes upregulated in the tumor colonies of the macrobead are likely adaptations to this novel environment, as well as an amplification of G1/S cell-cycle checkpoints. The data presented, including SCA-1 and Oct4 positivity and the upregulation of stem cell-like genes such as those associated with the Wnt pathway, support the notion that the macrobead selects for a subpopulation of cells with cancer stem cell or cancer progenitor properties.