Human skin uses millions of hairs and glands distributed across the body surface to function as an external barrier, thermoregulator and stimuli sensor. The large-scale generation of human skin with these appendages would be beneficial, but is challenging. Here, we describe a detailed protocol for generating hair-bearing skin tissue entirely from a homogeneous population of human pluripotent stem cells in a three-dimensional in vitro culture system. Defined culture conditions are used over a 2-week period to induce differentiation of pluripotent stem cells to surface ectoderm and cranial neural crest cells, which give rise to the epidermis and dermis, respectively, in each organoid unit. After 60 d of incubation, the skin organoids produce hair follicles. By day ~130, the skin organoids reach full complexity and contain stratified skin layers, pigmented hair follicles, sebaceous glands, Merkel cells and sensory neurons, recapitulating the cell composition and architecture of fetal skin tissue at week 18 of gestation. Skin organoids can be maintained in culture using this protocol for up to 150 d, enabling the organoids to be used to investigate basic skin biology, model disease and, further, reconstruct or regenerate skin tissue.