Developing technologies for scalable production of human organoids has gained increased attention for "organoid medicine" and drug discovery. We developed a scalable and integrated differentiation process for generation of hepatic organoid from human pluripotent stem cells (hPSCs) in a fully controlled stirred tank bioreactor with 150 ml working volume by application of physiological oxygen concentrations in different liver tissue zones. We found that the 20-40% dissolved oxygen concentration [DO] (corresponded to 30-60 mmHg pO2 within the liver tissue) significantly influences the process outcome via regulating the differentiation fate of hPSC aggregates by enhancing mesoderm induction. Regulation of the [DO] at 30% DO resulted in efficient generation of human fetal-like hepatic organoids that had a uniform size distribution and were comprised of red blood cells and functional hepatocytes, which exhibited improved liver-specific marker gene expressions, key liver metabolic functions, and, more important, higher inducible cytochrome P450 activity compared to the other trials. These hepatic organoids were successfully engrafted in an acute liver injury mouse model and produced albumin after implantation. These results demonstrated the significant impact of the dissolved oxygen concentration on hPSC hepatic differentiation fate and differentiation efficacy that should be considered ascritical translational aspect of established scalable liver organoid generation protocols for potential clinical and drug discovery applications. © 2020 Wiley Periodicals LLC.