Development of an optogenetically controllable human neural network model in three-dimensional (3D) cultures can provide an investigative system that is more physiologically relevant and better able to mimic aspects of human brain function. Light-sensitive neurons were generated by transducing channelrhodopsin-2 (ChR2) into human induced pluripotent stem cell (hiPSC) derived neural progenitor cells (Axol) using lentiviruses and cell-type specific promoters. A mixed population of human iPSC-derived cortical neurons, astrocytes and progenitor cells were obtained (Axol-ChR2) upon neural differentiation. Pan-neuronal promoter synapsin-1 (SYN1) and excitatory neuron-specific promoter calcium-calmodulin kinase II (CaMKII) were used to drive reporter gene expression in order to assess the differentiation status of the targeted cells. Expression of ChR2 and characterisation of subpopulations in differentiated Axol-ChR2 cells were evaluated using flow cytometry and immunofluorescent staining. These cells were transferred from 2D culture to 3D alginate hydrogel functionalised with arginine-glycine-aspartate (RGD) and small molecules (Y-27632). Improved RGD-alginate hydrogel was physically characterised and assessed for cell viability to serve as a generic 3D culture system for human pluripotent stem cells (hPSCs) and neuronal cells. Prior to cell encapsulation, neural network activities of Axol-ChR2 cells and primary neurons were investigated using calcium imaging. Results demonstrate that functional activities were successfully achieved through expression of ChR2- by both the CaMKII and SYN1 promoters. The RGD-alginate hydrogel system supports the growth of differentiated Axol-ChR2 cells whilst allowing detection of ChR2 expression upon light stimulation. This allows precise and non-invasive control of human neural networks in 3D.