Because of unavoidable confounding variables in the direct study of human subjects, it has been difficult to unravel the effects of prenatal cocaine exposure on the human fetal brain, as well as the cellular and biochemical mechanisms involved. Here, we propose a novel approach using a human pluripotent stem cell (hPSC)-based 3D neocortical organoid model. This model retains essential features of human neocortical development by encompassing a single self-organized neocortical structure, without including an animal-derived gelatinous matrix. We reported previously that prenatal cocaine exposure to rats during the most active period of neural progenitor proliferation induces cytoarchitectural changes in the embryonic neocortex. We also identified a role of CYP450 and consequent oxidative ER stress signaling in these effects. However, because of differences between humans and rodents in neocorticogenesis and brain CYP metabolism, translation of the research findings from the rodent model to human brain development is uncertain. Using hPSC 3D neocortical organoids, we demonstrate that the effects of cocaine are mediated through CYP3A5-induced generation of reactive oxygen species, inhibition of neocortical progenitor cell proliferation, induction of premature neuronal differentiation, and interruption of neural tissue development. Furthermore, knockdown of CYP3A5 reversed these cocaine-induced pathological phenotypes, suggesting CYP3A5 as a therapeutic target to mitigate the deleterious neurodevelopmental effects of prenatal cocaine exposure in humans. Moreover, 3D organoid methodology provides an innovative platform for identifying adverse effects of abused psychostimulants and pharmaceutical agents, and can be adapted for use in neurodevelopmental disorders with genetic etiologies.