Human embryonic stem cells (hESCs) have enormous potential as a source of cells for cell replacement therapies and as a model for early human development. In this study we examined the differentiating potential of hESCs into hepatocytes in two- and three-dimensional (2D and 3D) culture systems. Embryoid bodies (EBs) were inserted into a collagen scaffold 3D culture system or cultured on collagen-coated dishes and stimulated with exogenous growth factors to induce hepatic histogenesis. Immunofluorescence analysis revealed the expression of albumin (ALB) and cytokeratin-18 (CK-18). The differentiated cells in 2D and 3D culture system displayed several characteristics of hepatocytes, including expression of transthyretin, alpha-1-antitrypsin, cytokeratin 8, 18, 19, tryptophan-2,3-dioxygenase, tyrosine aminotransferase, glucose-6-phosphatase (G6P), cytochrome P450 subunits 7a1 and secretion of alpha-fetoprotein (AFP) and ALB and production of urea. In 3D culture, ALB and G6P were detected earlier and higher levels of urea and AFP were produced, when compared with 2D culture. Electron microscopy of differentiated hESCs showed hepatocyte-like ultrastructure, including glycogon granules, well-developed Golgi apparatuses, rough and smooth endoplasmic reticuli and intercellular canaliculi. The differentiation of hESCs into hepatocyte-like cells within 3D collagen scaffolds containing exogenous growth factors, gives rise to cells displaying morphological features, gene expression patterns and metabolic activities characteristic of hepatocytes and may provide a source of differentiated cells for treatment of liver diseases.