The skin is a multi-layered organ equipped with appendages (i.e. follicles and glands) critical for regulating bodily fluid retention and temperature, guarding against external stresses, and mediating touch and pain sensation 1, 2 . Reconstruction of appendage-bearing skin in cultures and in bioengineered grafts remains an unmet biomedical challenge 3– 9 . Here, we report an organoid culture system that generates complex skin from human pluripotent stem cells. We use step-wise modulation of the TGFβ and FGF signalling pathways to co-induce cranial epithelial cells and neural crest cells within a spherical cell aggregate. During 4–5 months incubation, we observe the emergence of a cyst-like skin organoid composed of stratified epidermis, fat-rich dermis, and pigmented hair follicles equipped with sebaceous glands. A network of sensory neurons and Schwann cells form nerve-like bundles that target Merkel cells in organoid hair follicles, mimicking human touch circuitry. Single-cell RNA-sequencing and direct comparison to foetal specimens suggest that skin organoids are equivalent to human facial skin in the second-trimester of development. Moreover, we show that skin organoids form planar hair-bearing skin when grafted on nude mice. Together, our results demonstrate that nearly complete skin can self-assemble in vitro and be used to reconstitute skin in vivo. We anticipate skin organoids will be foundational to future studies of human skin development, disease modelling, or reconstructive surgery.