In drug development, a system for predicting drug metabolism and drug‐induced toxicity is necessary to ensure drug safety. Cytochrome P450 family 3 subfamily A member 4 (CYP3A4) is an important drug‐metabolizing enzyme expressed in the liver and small intestine, and predicting CYP3A4‐mediated drug metabolism and drug‐induced toxicity is essential. We previously developed procedures to differentiate human induced pluripotent stem (iPS) cells into hepatocyte‐like cells (HLCs) or intestinal epithelial‐like cells (IECs) with a fetal phenotype as well as a highly efficient genome editing technology that could enhance the homologous recombination efficiency at any locus, including CYP3A4. By using human iPS cells and our genome editing technology, we generated CYP3A4‐knockout (KO) iPS cell‐derived HLCs and IECs for the evaluation of CYP3A4‐mediated drug metabolism and drug‐induced toxicity. CYP3A4 deficiency did not affect pluripotency and hepatic and intestinal differentiation capacities, and CYP3A4 activity was entirely eradicated by CYP3A4 KO. Off‐target effects (e.g., inhibition of bile acid excretion) were hardly observed in CYP3A4‐KO cells but were observed in CYP3A4 inhibitor‐treated (e.g., ketoconazole) cells. To evaluate whether drug‐induced hepatotoxicity and enterotoxicity could be predicted using our model, we exposed CYP3A4‐KO HLCs and IECs to acetaminophen, amiodarone, desipramine, leflunomide, tacrine, and tolcapone and confirmed that these cells could predict CYP3A4‐mediated toxicity. Finally, we examined whether the therapeutic effects of an anti‐hepatitis C virus (HCV) drug metabolized by CYP3A4 would be predicted using our model. CYP3A4‐KO HLCs were treated with asunaprevir (antiviral drug metabolized by CYP3A4) after HCV infection, and the anti‐viral effect was indeed strengthened by CYP3A4 KO. Conclusion: We succeeded in generating a novel evaluation system for prediction of CYP3A4‐mediated drug metabolism and drug‐induced toxicity.