Induced pluripotent stem (iPS) cells are human somatic cells that have been reprogrammed to a pluripotent state. Through several elegant technologies, we are now able to generate human iPS cells with disease genotypes that could serve as invaluable tools for human disease modeling. This could lead to an understanding of the root causes of a disease and to the development of effective prophylactic and therapeutic strategies for it. However, we are still far from generating fully functional liver cells from stem cells, including iPS cells, on in vitro culture systems. Tissue-engineering techniques have opened the window to inducing a functional fate for differentiated cells by providing a microenvironment that allows the maintenance of signals similar to those found in the natural microenvironment. Here we review the current technology to establish iPS cells and discuss strategies to generate human liver disease modeling using iPS cell technology in concert with bioengineering approaches.