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Objective: This study is to research and develop a simple and rapid method to directly differentiate the induced pluripotent stem cells (i PS) into functional hepatocytes in vitro. Methods: According to the development of normal hepatocytes in vitro, a simplified method was designed for differentiation of i PS cells into endodermal cells. The phenotypes of endodermal cells was identified by q PCR and flow cytometry, and then these cells were further differentiated into hepatocyte-like cells. The characteristics and functions of hepatocytes were identified by qPCR, ELISA and immunofluorescence. Results: The results showed that the m RNA/protein expression of OCT4 and NANOG were decreased significantly, and the m RNA/protein expression of endodermal cell-related genes, CXCR4, FOXA2and HNF4A,were increased significantly at day 7 after i PS cell induction. Hepatocyte specific marker genes ALB, TDO2, RBP4, G6PC and hepatocyte drug enzyme genes CYPs were significantly upregulated at day 15, and high levels of albumin and urea were produced simultaneously. Positive PAS glycogen staining and active uptake and release of indocyanine green were observed in the induced hepatocytes. It was confirmed that the hepatocyte-like cells had the partial functions of primary hepatocytes. Conclusion: This easy and efficient induction method can be used in differentiation of i PS cells into functional hepatocytes by mimicking the process of liver organogenesis in vitro. This study provides the possibility for massive production of i PS-derived hepatocytes and their applications in cellular therapy and drug screening models. [ABSTRACT FROM AUTHOR]