Cell models to investigate intestinal absorption functions, such as those of transporters and metabolic enzymes, are essential for oral drug discovery and development. The purpose of this study was to generate intestinal epithelial cells from human induced pluripotent stem cells (hiPSC-IECs) and then clarify whether the functions of hydrolase and transporters in them reflect oral drug absorption in the small intestine. The hiPSC-IECs showed the transport activities of P-glycoprotein (P-gp), breast cancer resistance protein (BCRP), and peptide transporter 1 (PEPT1), revealed by using their probe substrates ([H]digoxin, sulfasalazine, and [C]glycylsarcosine), and the metabolic activities of CYP3A4, CES2, and CES1, which were clarified using their probe substrates (midazolam, irinotecan, and temocapril). The intrinsic clearance by hydrolysis of six ester prodrugs into the active form in hiPSC-IECs was correlated with the plasma exposure ( , AUC, and bioavailability) of the active form after oral administration of these prodrugs to rats. Also, the permeability coefficients of 14 drugs, containing two substrates of P-gp (doxorubicin and [H]digoxin), one substrate of BCRP (sulfasalazine), and 11 nonsubstrates of transporters (ganciclovir, [C]mannitol, famotidine, sulpiride, atenolol, furosemide, ranitidine, hydrochlorothiazide, acetaminophen, propranolol, and antipyrine) in hiPSC-IECs were correlated with their values of the fraction of intestinal absorption () in human clinical studies. These findings suggest that hiPSC-IECs would be a useful cell model to investigate the hydrolysis of ester prodrugs and to predict drug absorption in the small intestine.