Human induced pluripotent stem (iPS) cell-derived hepatocyte-like cells (HLCs) are expected to replace primary human hepatocytes (PHHs) as a new stable source of hepatocytes for pharmaceutical research. However, HLCs have lower hepatic functions than PHHs, require a long time for differentiation and cannot be prepared in large quantities because they do not proliferate after their terminal differentiation. To overcome these problems, we here established hepatic organoids (iHOs) from HLCs. We then showed that the iHOs could proliferate approximately 105-fold by more than 3 passages and expressed most hepatic genes more highly than HLCs. In addition, to enable their widespread use for in vitro drug discovery research, we developed a two-dimensional culture protocol for iHOs. Two-dimensionally cultured iHOs (iHO-Heps) expressed most of the major hepatocyte marker genes at much higher levels than HLCs, iHOs, and even PHHs. The iHO-Heps exhibited glycogen storage capacity, the capacity to uptake and release indocyanine green (ICG), albumin and urea secretion, and the capacity for bile canaliculi formation. Importantly, the iHO-Heps had the activity of major drug-metabolizing enzymes and responded to hepatotoxic drugs, much like PHHs. Thus, iHO-Heps overcome the limitations of the current models and promise to provide robust and reproducible pharmaceutical assays.