Idiosyncratic drug-induced hepatotoxicity is a major cause of liver damage and drug pipeline failure, and is difficult to study as patient-specific features are not readily incorporated in traditional hepatotoxicity testing approaches using population pooled cell sources. Here we demonstrate the use of patient-specific hepatocyte-like cells (HLCs) derived from induced pluripotent stem cells for modeling idiosyncratic hepatotoxicity to pazopanib (PZ), a tyrosine kinase inhibitor drug associated with significant hepatotoxicity of unknown mechanistic basis. In vitro cytotoxicity assays confirmed that HLCs from patients with clinically identified hepatotoxicity were more sensitive to PZ-induced toxicity than other individuals, while a prototype hepatotoxin acetaminophen was similarly toxic to all HLCs studied. Transcriptional analyses showed that PZ induces oxidative stress (OS) in HLCs in general, but in HLCs from susceptible individuals, PZ causes relative disruption of iron metabolism and higher burden of OS. Our study establishes the first patient-specific HLC-based platform for idiosyncratic hepatotoxicity testing, incorporating multiple potential causative factors and permitting the correlation of transcriptomic and cellular responses to clinical phenotypes. Establishment of patient-specific HLCs with clinical phenotypes representing population variations will be valuable for pharmaceutical drug testing.