Cell models are becoming more complex to better mimic the in vivo environment and provide greater predictivity for compound efficacy and toxicity. There is an increasing interest in exploring the use of three-dimensional (3D) spheroids for modeling developmental and tissue biology with the goal of accelerating translational research in these areas. Accordingly, the development of high-throughput quantitative assays using 3D cultures is an active area of investigation. In this study, we have developed and optimized methods for the formation of 3D liver spheroids derived from human iPS cells and used those for toxicity assessment. We used confocal imaging and 3D image analysis to characterize cellular information from a 3D matrix to enable a multi-parametric comparison of different spheroid phenotypes. The assay enables characterization of compound toxicities by spheroid size (volume) and shape, cell number and spatial distribution, nuclear characterization, number and distribution of cells expressing viability, apoptosis, mitochondrial potential, and viability marker intensities. In addition, changes in the content of live, dead, and apoptotic cells as a consequence of compound exposure were characterized. We tested 48 compounds and compared induced pluripotent stem cell (iPSC)-derived hepatocytes and HepG2 cells in both two-dimensional (2D) and 3D cultures. We observed significant differences in the pharmacological effects of compounds across the two cell types and between the different culture conditions. Our results indicate that a phenotypic assay using 3D model systems formed with human iPSC-derived hepatocytes is suitable for high-throughput screening and can be used for hepatotoxicity assessment in vitro.