Liver tissue engineering aims to create transplantable liver grafts that can serve as substitutes for donor's livers. One major challenge in creating a fully functional liver tissue has been to recreate the biliary drainage in an engineered liver construct through integration of bile canaliculi (BC) with the biliary ductular network that would enable the clearance of bile from the hepatocytes to the host duodenum. In this study, we show the formation of such a hepatic microtissue by coculturing rat primary hepatocytes with cholangiocytes and stromal cells. Our results indicate that within the spheroids, hepatocytes maintained viability and function for up to 7 days. Viable hepatocytes became polarized by forming BC with the presence of tight junctions. Morphologically, hepatocytes formed the core of the spheroids, while cholangiocytes resided at the periphery forming a monolayer microcysts and tubular structures extending outward. The spheroids were subsequently cultured in clusters to create a higher order ductular network resembling hepatic lobule. The cholangiocytes formed functional biliary ductular channels in between hepatic spheroids that were able to collect, transport, and secrete bile. Our results constitute the first step to recreate hepatic building blocks with biliary drainage for repopulating the whole liver scaffolds to be used as transplantable liver grafts.