Objective: The molecular events that lead to human thyroid cell speciation remain incompletely characterized. It has been shown that overexpression of the regulatory transcription factors Pax8 and Nkx2-1 (ttf-1) directs murine embryonic stem (mES) cells to differentiate into thyroid follicular cells by initiating a transcriptional regulatory network. Such cells subsequently organized into three-dimensional follicular structures in the presence of extracellular matrix. In the current study, human embryonic stem (hES) cells were studied with the aim of recapitulating this scenario and producing functional human thyroid cell lines. Methods: Reporter gene tagged pEZ-lentiviral vectors were used to express human PAX8-eGFP and NKX2-1-mCherry in the H9 hES cell line followed by differentiation into thyroid cells directed by Activin A and thyrotropin (TSH). Results: Both transcription factors were expressed efficiently in hES cells expressing either PAX8, NKX2-1, or in combination in the hES cells, which had low endogenous expression of these transcription factors. Further differentiation of the double transfected cells showed the expression of thyroid-specific genes, including thyroglobulin (TG), thyroid peroxidase (TPO), the sodium/iodide symporter (NIS), and the TSH receptor (TSHR) as assessed by reverse transcription polymerase chain reaction and immunostaining. Most notably, the Activin/ TSH-induced differentiation approach resulted in thyroid follicle formation and abundant TG protein expression within the follicular lumens. On stimulation with TSH, these hES-derived follicles were also capable of dosedependent cAMP generation and radioiodine uptake, indicating functional thyroid epithelial cells. Conclusion: The induced expression of PAX8 and NKX2-1 in hES cells was followed by differentiation into thyroid epithelial cells and their commitment to form functional three-dimensional neo-follicular structures. The data provide proof of principal that hES cells can be committed to thyroid cell speciation under appropriate conditions.