Human skeletal elements are formed from distinct origins at distinct positions of the embryo. For example, the neural crest produces the facial bones, the paraxial mesoderm produces the axial skeleton, and the lateral plate mesoderm produces the appendicular skeleton. During skeletal development, different combinations of signaling pathways are coordinated from distinct origins during the sequential developmental stages. Models for human skeletal development have been established using human pluripotent stem cells (hPSCs) and by exploiting our understanding of skeletal development. Stepwise protocols for generating skeletal cells from different origins have been designed to mimic developmental trails. Recently, organoid methods have allowed the multicellular organization of skeletal cell types to recapitulate complicated skeletal development and metabolism. Similarly, several genetic diseases of the skeleton have been modeled using patient-derived induced pluripotent stem cells and genome-editing technologies. Model-based drug screening is a powerful tool for identifying drug candidates. This review briefly summarizes our current understanding of the embryonic development of skeletal tissues and introduces the current state-of-the-art hPSC methods for recapitulating skeletal development, metabolism, and diseases. We also discuss the current limitations and future perspectives for applications of the hPSC-based modeling system in precision medicine in this research field.