Hepatocytes produced from the differentiation of human pluripotent stem cells can be used to study human development and liver disease, to investigate the toxicological response of novel drug candidates, and as an alternative source of primary cells for transplantation therapies. Here, we describe a method to produce hepatocytes by differentiating human pluripotent stem cells into definitive endoderm, patterning definitive endoderm into anterior definitive endoderm, specifying anterior definitive endoderm into hepatic endoderm, and differentiating hepatic endoderm into immature hepatocytes. These cells are further matured in either two-dimensional or three-dimensional culture conditions to produce cells capable of metabolizing xenobiotics and generating liver-specific proteins, such as albumin and alpha 1 antitrypsin.