Generation of functional and vascularized organs from human induced pluripotent stem cells (iPSCs) will facilitate our understanding of human developmental biology and disease modeling, hopefully offering a drug-screening platform and providing novel therapies against end-stage organ failure. Here we describe a protocol for the in vitro generation of a 3D liver bud from human iPSC cultures and the monitoring of further hepatic maturation after transplantation at various ectopic sites. iPSC-derived specified hepatic cells are dissociated and suspended with endothelial cells and mesenchymal stem cells. These mixed cells are then plated onto a presolidified matrix, and they form a 3D spherical tissue mass termed a liver bud (iPSC-LB) in 1-2 d. To facilitate additional maturation, 4-d-old iPSC-LBs are transplanted in the immunodeficient mouse. Live imaging has identified functional blood perfusion into the preformed human vascular networks. Functional analyses show the appearance of multiple hepatic functions in a chronological manner in vivo.