<p>Physiologically relevant liver models are essential for advancing hepatic disorder research, especially for disease modeling and drug development, yet current in vitro systems fail to adequately recapitulate the architecture and function of the liver. Owing to the accessibility, robust proliferation and multilineage differentiation potential of human induced pluripotent stem cells (iPSCs), liver organoids derived from iPSCs have emerged as a promising resource in hepatology. Despite this promise, the field still faces persistent bottlenecks including incomplete hepatic maturation, insufficient incorporation of non-parenchymal cells (notably immune and stromal populations), phenotypic instability, and a lack of consensus on standardized differentiation protocols. Therefore, this review systematically analyzes the challenges and strategies of iPSC differentiation into liver organoids and the related influencing factors by focusing on multidimensional regulation of hepatobiliary development as well as the effects of cellular origin, culture system and liver microenvironment on hepatic differentiation of iPSCs. Moving forward, priority should be given to the following directions: (1) Elucidating the self-assembly mechanism of liver organoids to enable precise control of hepatobiliary differentiation, thereby better governing organoid morphology and improving reproducibility; (2) Replacing exogenous cytokines with small-molecule compounds at different stages of iPSC differentiation to simplify and standardize differentiation protocols; (3) Advancing liver organoid transplantation as a means to validate physiological functionality and shift cell therapy from passive replacement toward active tissue reconstruction; (4) Integrating artificial intelligence to achieve intelligent and precise regulation of hepatic differentiation.</p>