Drug-Induced Liver Injury (DILI) and herb Induced Liver Injury (HILI) continues to pose a substantial challenge in both clinical practice and drug development, representing a grave threat to patient well-being. This comprehensive review introduces a novel perspective on DILI and HILI by thoroughly exploring the intricate microenvironment of the liver. The dynamic interplay among hepatocytes, sinusoidal endothelial cells, Kupffer cells, hepatic stellate cells, cholangiocytes, and the intricate vascular network assumes a central role in drug metabolism and detoxification. Significantly, this microenvironment is emerging as a critical determinant of susceptibility to DILI and HILI. The review delves into the multifaceted interactions within the liver microenvironment, providing valuable insights into the complex mechanisms that underlie DILI and HILI. Furthermore, we discuss potential strategies for mitigating drug-induced liver injury by targeting these influential factors, emphasizing their clinical relevance. By highlighting recent advances and future prospects, our aim is to shed light on the promising avenue of leveraging the liver microenvironment for the prevention and mitigation of DILI and HILI. This deeper understanding is crucial for advancing clinical practices and ensuring patient safety in the realm of DILI and HILI.