Abstract Artificial liver models have been extensively developed for pathological modeling and toxicological studies. However, the prediction of existing in vitro liver models rarely corresponds to what is consequently observed in vivo owing to the structural and functional complexity of the liver. Here, a new liver model designed to enable the implantation and maintenance of liver buds in perfusable 3D hydrogels where a microvascular network develops within a 200 µm diffusion limit is developed. This system replicates inflammation, lipid accumulation, and fibrosis during the progressive processes of nonalcoholic fatty liver disease, in which this model predicted the results from a mouse model. This model reveals that a hepatic steatosis‐reducing drug restored mitochondrial activities with significant reduction of inflammation, oxidative stress, and lipid accumulation. This liver model is not only highly predictive but also scalable and easy to apply to high‐throughput drug screening and implantation studies, suggesting a promising alternative to animal models.