Horseradish (Armoracia rusticana) hairy roots generated by the integration of a part of Ri plasmid in Agrobacterium rhizogenes were excised and encapsulated in alginate beads to produce individual artificial seeds. Root fragments with an apical meristem or a branch efficiently regenerated to whole plants, and those more than 5 mm in length possessed a high shoot-formation ability. We found that naphthaleneacetic acid (NAA) or indole-3-butyric acid treatment stimulated branch emergence and shoot formation on the roots. These results indicated that root fragment with a branch induced by auxin was the most reactive portion. After two-step liquid culture (14 d without NAA and 10 d with NAA), root fragments with high shoot-formation frequency could be selected as material for artificial seeds. Development to a plantlet after encapsulation was inhibited by NAA, and auxin was not required for encapsulation. When encapsulated root fragments were placed under light conditions, addition of 3% of sucrose in the beads was sufficient for regeneration. The results showed the high potential of hairy root for propagation in combination with the formation of artificial seeds.