The high failure rate of the new drug development has been well recognized. Relying on the pre-clinical data obtained from animal experiments will inevitably cause a low concordance with human clinical trials, which will eventually lead to new drug development failure. Employing human induced pluripotent stem cells (iPSCs) or adult stem cells to simulate disease models can not only provide an unlimited cell materials, but also faithfully represent the genetic background of a certain disease, when iPSCs or adult stem cells derived from patients with a specific disease genetic variation are applied. In addition, gene editing methods can be used to introduce genetic variants of interest into stem cells to generate disease models. Furthermore, by establishing a cell bank with a population of iPSCs in petri dish, in vitro human genetic studies can be carried out in these cells, with GWAS and QTL studies applied to identify genetic variants that are associated with drug sensitivity or cytotoxicity. These efforts may offer valuable information for the recruitment of suitable patients for clinical trials. Therefore, stem cell-derived disease models can provide valuable resources for the pathophysiological studies of diseases as well as the drug development. In this review, we will briefly introduce the development of the liver disease models derived from stem cells and their applications in disease study and drug development.