Hydrogel droplets encapsulating cells and molecules provide a unique platform in biochemistry, biology, and medicine, including single-cell and single-molecule analysis, directed molecular evolution, and detection of cellular secretions. The ability to prepare hydrogel droplets with high monodispersity can lead to synchronization of populations, more controlled biomaterials, and more quantitative assays. Here, we present an inertial microfluidic device for passive, continuous, and high-throughput sorting of hydrogel droplets by size. The sorting is achieved due to size-dependent lateral inertial equilibrium positions: hydrogel droplets of different sizes have different equilibrium positions under the combined effects of shear-gradient lift and wall-effect lift forces. We apply this separation technique to isolate smaller hydrogel droplets containing microalgal colonies from larger empty droplets. We found that hydrogel droplets containing microalga Euglena gracilis (E. gracilis) shrink as cells grow and divide, while empty hydrogel droplets retain their size. Cell-laden hydrogel droplets were collected with up to 93.6% purity, and enrichment factor up to 5.51. After sorting, we were able to recover cells from hydrogel droplets without significantly affecting cell viability.