Chitosan was used as a matrix to induce three-dimensional spheroids of HepG2 cells. Chitosan films were prepared and used for culturing Hep G2 cells. Attachment kinetics of the cells was studied on the chitosan films. The optimum seeding density of the Hep G2 cells, required for three-dimensional spheroid formation was determined and was found to be 5×10⁴/ml. The growth kinetics of Hep G2 cells was studied using (3-(4, 5-Dimethylthiazol-2-yl)-2, 5-diphenyltetrazolium bromide) (MTT) assay, and morphology of the cells was studied through optical photographs taken at various days of culture. The liver cell functions of the spheroids were determined by measuring albumin and urea secretions. The results obtained from these studies have shown that the culture of Hep G2 cells on chitosan matrix taking appropriate seeding density resulted in the formation of three-dimensional spheroids and exhibited higher amount of albumin and urea synthesis compared to monolayer culture. These miniature “liver tissue like” models can be used for in vitro tissue engineering applications like preliminary evaluation of the toxicity of drugs and chemicals.