In an effort to construct in vitro liver tissue models for drug screening, human induced pluripotent stem cell (hiPSC)-derived hepatocyte-like cells (iHeps) are a promising cell source alternative to primary human hepatocytes (PHHs). However, thus far, the functions of iHeps are significantly reduced when compared to those of PHHs. In this study, we aimed to determine the role of oxygen supply to the cell layer, which has not been investigated as thoroughly as other conditions, such as soluble factors, the extracellular matrix, or co-culture with nonparenchymal cells, in improving the hepatic function of iHeps. Polydimethylsiloxane (PDMS), which has a high oxygen permeability, was used for cell culture [O-2 (+)], in addition to conventional tissue culture-treated polystyrene [TCPS; O-2 (-)]. During endoderm differentiation, O-2 (+) culture resulted in reduced expression of HIF-1 alpha. As a result, we observed higher expression of the endoderm marker (GATA4). After hepatic differentiation, iHeps generated in O-2 (+) culture showed about a threefold increase per cell in albumin production. Moreover, among the O-2 (+) culture conditions, cells differentiating at a physiological oxygen concentration showed increased expression of several mature hepatic marker genes (ALB, CYP3A4, and CYP1A2) and increased ratio of ALB-positive cells. In O-2 (+) culture, iHeps exhibited a per cell oxygen consumption rate two times higher than that observed in O-2 (-) culture. Furthermore, in sufficiently oxygen-supplied culture systems, cells showed a self-organized, multilayered configuration, and the DNA content in the culture was two to three times higher than that in O-2 (-) culture. Considering the amount of DNA and the ration of iHeps in each culture condition, we could achieve about 7.5 times higher per unit surface area productivity of iHeps in O-2 (+) culture. Therefore, these results demonstrate that direct oxygenation through a PDMS membrane enhances the maturation and efficient production of iHeps. Thus, improving oxygen supply to the cell layer is important for iHeps culture, and direct oxygenation through a PDMS membrane is a promising alternative to conventional TCPS plates for the maturation of iHeps in vitro. Impact Statement Although oxygen is a vital nutrient for the hepatocytes in vitro, few reports have focused on its effect during hepatic differentiation of induced pluripotent stem cells (iPSCs). In this report, we performed the hepatic differentiation of human iPSCs (hiPSCs) under different atmospheric oxygen concentrations and oxygen supply fluxes to investigate the effects of oxygen in terms of both the concentration and the supply flux. Results demonstrate that direct oxygenation through a polydimethylsiloxane (PDMS) membrane enhances the maturation and efficient production of hiPSC-derived hepatocyte-like cells (iHeps). Thus, direct oxygenation through a PDMS membrane is a better alternative culture method over conventional tissue culture-treated polystyrene (TCPS) plates for the maturation of hiPSC-derived hepatocytes in vitro.