Drug‐induced liver injury (DILI) is a leading cause of acute liver failure. A major obstacle in the prediction or evaluation of DILI is the lack of an experimental model(s) that recapitulates the stable and physiologically relevant liver functions and reflects accurately the level of drug hepatotoxicity. Native extracellular matrices that are secreted and maintained by resident cells are receiving great interest as biomaterials for cell culture and cell delivery. In this study, a hepatic spheroid model system, treated with cryopulverized liver biomatrix scaffolds (LBSs), is established for DILI investigations. The LBSs provide a liver‐specific microenvironment bioactivating metabolic traits paralleling those in vivo, resulting in the fact that LBS‐bioactivated model system shows enhancing liver‐specific functions (albumin secretion, urea synthesis, glycogen storage), cytochrome P450 enzymes (CYPs) metabolic activity, bile excretion, and increased expression of phase I and II metabolism enzymes, transporters, and nuclear receptors, collectively hypothesized to result from increased cell–cell and cell–matrix interactions. Toxicity assessments with LBS‐bioactivated hepatic spheroids reveal an improved sensitivity in identifying hepatotoxic compounds. In summary, using this model system, a simple but robust high‐throughput‐compatible methodology is developed, which shows great potential for use in toxicity screening assays, and represents an alternative to animal models for studying DILI.