Chronic liver injury, as observed in non-alcoholic steatohepatitis (NASH), progressive fibrosis, and cirrhosis, remains poorly treatable. Steatohepatitis causes hepatocyte loss in part by a direct lipotoxic insult, which is amplified by derangements in the non-parenchymal cellular (NPC) interactive network wherein hepatocytes reside, including, hepatic stellate cells, liver sinusoidal endothelial cells and liver macrophages. To create an in vitro culture model encompassing all these cells, that allows studying liver steatosis, inflammation and fibrosis caused by NASH, we here developed a fully defined hydrogel microenvironment, termed hepatocyte maturation (HepMat) gel, that supports maturation and maintenance of pluripotent stem cell (PSC) derived hepatocyte- and NPC-like cells for at least one month. The HepMat-based co-culture system modeled key molecular and functional features of TGFβ-induced liver fibrosis and fatty-acid induced inflammation and fibrosis better than monocultures of its constituent cell populations. The novel co-culture system should open new avenues for studying mechanisms underlying liver steatosis, inflammation and fibrosis as well as for assessing drugs counteracting these effects.