Dysfunction of pancreatic δ cells contributes to the etiology of diabetes. Despite their important role, human δ cells are scarce, limiting physiological studies and drug discovery targeting δ cells. To date, no directed δ-cell differentiation method has been established. Here, we demonstrate that fibroblast growth factor (FGF) 7 promotes pancreatic endoderm/progenitor differentiation, whereas FGF2 biases cells towards the pancreatic δ-cell lineage via FGF receptor 1. We develop a differentiation method to generate δ cells from human stem cells by combining FGF2 with FGF7, which synergistically directs pancreatic lineage differentiation and modulates the expression of transcription factors and SST activators during endoderm/endocrine precursor induction. These δ cells display mature RNA profiles and fine secretory granules, secrete somatostatin in response to various stimuli, and suppress insulin secretion from in vitro co-cultured β cells and mouse β cells upon transplantation. The generation of human pancreatic δ cells from stem cells in vitro would provide an unprecedented cell source for drug discovery and cell transplantation studies in diabetes.