Early phase drug development relies on primary human hepatocytes for studies of drug metabolism, cytotoxicity, and drug-drug interactions. However, primary human hepatocytes rapidly lose metabolic functions ex vivo and are refractory to expansion in culture and thus are limited in quantity. Hepatocytes derived from human pluripotent stem cells (either embryonic stem (ES) or induced pluripotent stem (iPS) cells), have the potential to overcome many of the limitations of primary human hepatocytes, but to date the use of human pluripotent stem cell-derived hepatocytes has been limited by poor enzyme inducibility and immature metabolic function. Here, we present a simple suspension culture of aggregates of ES cell-derived hepatocytes that compared to conventional monolayer adherent culture significantly increases induction of CYP 1A2 by omeprazole and 3A4 by rifampicin. Using liquid chromatography-tandem mass spectrometry, we further show that ES cell-derived hepatocytes in aggregate culture convert omeprazole and rifampicin to their human-specific metabolites. We also show that these cells convert acetaminophen (APAP) to its cytotoxic metabolite (N-acetyl-p-benzoquinone imine (NAPQI)), although they fail to perform APAP glucuronidation. In summary, we show that human pluripotent stem cell-derived hepatocytes in aggregate culture display improved enzymatic inducibility and metabolic function and is a promising step toward a simple, scalable system, but nonetheless will require further improvements to completely replace primary human hepatocytes in drug development.