The primary hepatocyte is the best benchmark for drug biotransformation studies. However, due to the severe shortage of primary hepatocytes, there is a need for alternative reliable cell source. This study aims to isolate multipotent epithelial cells from the umbilical cord, differentiate these cells into hepatocyte-like cells (HLCs), and investigate the potential of using the differentiated cells for in vitro drug metabolism model. Human umbilical cord lining epithelial cells (UCLECs) were subjected to hepatic induction over a period of 28 days. HepG2 and cryopreserved human hepatocytes were used as control. Immunohistological staining was carried out for α-fetoprotein (AFP), albumin, cytokeratin 18 (CK18), and 19 (CK19). Glycogen storage ability was assessed through periodic acid-Schiff stain. Reverse transcription polymerase chain reaction was performed to examine gene expression of hepatic nuclear factor 4α (HNF4α) and cytochrome P450 isozymes 1A2, 2C9, 2D6, and 3A4. Ultra-performance liquid chromatography tandem mass spectrometry (UPLC/MS/MS) was utilized to analyze functional metabolic ability of the HLCs, where CYP3A4 was chosen as the study focus and testosterone as the drug substrate. After 28 days of induction, the fibroblastic phenotype of UCLECs changed to rotund polygonal shape resembling that of hepatocytes. Protein expression of AFP and CK19 was negative, while albumin and CK18 expression was upregulated. Gene expression of HNF4α, CYP1A2, CYP2D6, and CYP3A4 was observed but not for CYP2C9. After 4 h of incubation with testosterone, UPLC/MS/MS detected 2α-, 6β-, 15β-, and 16β-hydroxytestosterone. UCLECs are able to differentiate into HLCs that express liver-specific markers, and have functional metabolic capabilities.