Existing in vitro models of human intestinal function commonly rely on use of established epithelial cell lines, such as Caco-2 cells, which form polarized epithelial monolayers but fail to mimic more complex intestinal functions that are required for drug development and disease research. We show here that a microfluidic ‘Gut-on-a-Chip’ technology that exposes cultured cells to physiological peristalsis-like motions and liquid flow can be used to induce human Caco-2 cells to spontaneously undergo robust morphogenesis of three-dimensional (3D) intestinal villi. The cells of that line these villus structures are linked by tight junctions, and covered by brush borders and mucus. They also reconstitute basal proliferative crypts that populate the villi along the crypt–villus axis, and form four different types of differentiated epithelial cells (absorptive, mucus-secretory, enteroendocrine, and Paneth) that take characteristic positions similar to those observed in living human small intestine. Formation of these intestinal villi also results in exposure of increased intestinal surface area that mimics the absorptive efficiency of human intestine, as well enhanced cytochrome P450 3A4 isoform-based drug metabolizing activity compared to conventional Caco-2 cell monolayers cultured in a static Transwell system. The ability of the human Gut-on-a-Chip to recapitulate the 3D structures, differentiated cell types, and multiple physiological functions of normal human intestinal villi may provide a powerful alternative in vitro model for studies on intestinal physiology and digestive diseases, as well as drug development.