Stem cell-derived hepatocyte-like cells hold great potential for the treatment of liver disease and for drug toxicity screening. The success of these applications hinges on the generation of differentiated cells with high liver specific activities. Many protocols have been developed to guide human embryonic stem cells (hESCs) to differentiate to the hepatic lineage. Here we report cultivation of hESCs as three-dimensional aggregates that enhances their differentiation to hepatocyte-like cells. Differentiation was first carried out in monolayer culture for 20 days. Subsequently cells were allowed to self-aggregate into spheroids. Significantly higher expression of liver-specific transcripts and proteins, including Albumin, phosphoenolpyruvate carboxykinase, and asialoglycoprotein receptor 1 was observed. The differentiated phenotype was sustained for more than 2 weeks in the three-dimensional spheroid culture system, significantly longer than in monolayer culture. Cells in spheroids exhibit morphological and ultrastructural characteristics of primary hepatocytes by scanning and transmission electron microscopy in addition to mature functions, such as biliary excretion of metabolic products and cytochrome P450 activities. This three-dimensional spheroid culture system may be appropriate for generating high quality, functional hepatocyte-like cells from ESCs.