Donor organ shortages for transplantation remain a serious global concern, and alternative treatment is in high demand. Fetal cells and tissues have considerable therapeutic potential as, for example, organoid technology that uses human induced pluripotent stem cells (hiPSCs) to generate unlimited human fetal-like cells and tissues. We previously reported the in vivo vascularization of early fetal liver-like hiPSC-derived liver buds (LBs) and subsquent improved survival of recipient mice with subacute liver failure. Here, we show hiPSC-liver organoids (LOs) that recapitulate midgestational fetal liver promote de novo liver generation when grafted onto the surface of host livers in chemical fibrosis models, thereby recovering liver function. We found that fetal liver, a hematopoietic tissue, highly expressed macrophage-recruiting factors and antifibrotic M2 macrophage polarization factors compared with the adult liver, resulting in fibrosis reduction because of CD163+ M2-macrophage polarization. Next, we created midgestational fetal liver-like hiPSC-LOs by fusion of hiPSC-LBs to induce static cell-cell interactions and found that these contained complex structures such as hepatocytes, vasculature, and bile ducts after transplantation. This fusion allowed the generation of a large human tissue suitable for transplantation into immunodeficient rodent models of liver fibrosis. hiPSC-LOs showed superior liver function compared with hiPSC-LBs and improved survival and liver function upon transplantation. In addition, hiPSC-LO transplantation ameliorated chemically induced liver fibrosis, a symptom of liver cirrhosis that leads to organ dysfunction, through immunomodulatory effects, particularly on CD163+ phagocytic M2-macrophage polarization. Together, our results suggest hiPSC-LO transplantation as a promising therapeutic option for liver fibrosis.