Photosynthetic microalgae are an attractive source of food, fuel, or nutraceuticals, but commercial production of microalgae is limited by low spatial efficiency. In the present study we developed a simple photosynthetic hydrogel system that cultivates the green microalga, Marinichlorella kaistiae KAS603, together with a novel strain of the bacteria, Erythrobacter sp. We tested the performance of the co-culture in the hydrogel using a combination of chlorophyll-a fluorimetry, microsensing, and bio-optical measurements. Our results showed that growth rates in algal–bacterial hydrogels were about threefold enhanced compared to hydrogels with algae alone. Chlorophyll-afluorimetry–based light curves found that electron transport rates were enhanced about 20% for algal–bacterial hydrogels compared to algal hydrogels for intermediate irradiance levels. We also show that the living hydrogel is stable under different environmental conditions and when exposed to natural seawater. Our study provides a potential bio-inspired solution for problems that limit the space-efficient cultivation of microalgae for biotechnological applications.