Retinal drug toxicity screening is essential for the development of safe treatment strategies for a large number of diseases. To this end, retinal organoids derived from human pluripotent stem cells (hPSCs) provide a suitable screening platform due to their similarity to the human retina and the ease of generation in large-scale formats. In this study, two hPSC cell lines were differentiated to retinal organoids, which comprised all key retinal cell types in multiple nuclear and synaptic layers. Single-cell RNA-Seq of retinal organoids indicated the maintenance of retinal ganglion cells and development of bipolar cells: both cell types segregated into several subtypes. Ketorolac, digoxin, thioridazine, sildenafil, ethanol, and methanol were selected as key compounds to screen on retinal organoids because of their well-known retinal toxicity profile described in the literature. Exposure of the hPSC-derived retinal organoids to digoxin, thioridazine, and sildenafil resulted in photoreceptor cell death, while digoxin and thioridazine additionally affected all other cell types, including Müller glia cells. All drug treatments caused activation of astrocytes, indicated by dendrites sprouting into neuroepithelium. The ability to respond to light was preserved in organoids although the number of responsive retinal ganglion cells decreased after drug exposure. These data indicate similar drug effects in organoids to those reported in in vivo models and/or in humans, thus providing the first robust experimental evidence of their suitability for toxicological studies.