Organoids derived from human induced pluripotent stem cells (hiPSC) are potentially applicable for regenerative medicine. However, the applications have been hampered by limited organoid size and function as a consequence of a lack of progenitor expansion. Here, we report the recapitulation of progenitor expansion in hiPSC-liver organoids based on the analysis of mouse development. Visualization of blood perfusion and oxygen levels in mouse embryos reveals a transient hypoxic environment during hepatoblast expansion, despite active blood flow. During this specific stage, the placenta expresses various growth factors. Human and mouse placenta-liver interaction analysis identifies various placenta-derived factors. Among them, IL1α efficiently induces the growth in hiPSC-liver organoids as well as mouse fetal livers following progenitor expansion under hypoxia. Furthermore, subsequent oxygenation demonstrates that progenitors expanded by IL1α contribute to hiPSC-liver organoid size and function. Taken together, we demonstrate that treatment with the placenta-derived factor under hypoxia is a crucial human organoid culture technique that efficiently induces progenitor expansion.