The thymus is an essential primary lymphoid organ in which T cells mature, proliferate, and acquire a broad and self-tolerant T cell receptor repertoire. In the thymus, specialized thymic epithelial cells (TECs) select T cells capable of recognizing foreign antigens, and eliminate self-reactive T cells to prevent autoimmunity. In addition, the thymus also contributes to the differentiation of regulatory T cells which confine immune responses to actively preserve central tolerance. During thymic development, the interactions between hematopoietic lymphoid progenitor cells and thymic epithelial progenitor cells (TEPCs) provides indispensable signals to the development of the thymic epithelium. In humans, unlike in mice, the development of the thymus is completed before birth. There is no evidence of thymic stem cells that could contribute to a sustained regeneration of the thymic epithelium throughout life. Accordingly, the thymus has no endogenous capacity to regenerate. The thymus peaks in size during infancy and involutes with age, leading to the weakened immune function of the elderly known as immune senescence. Allogeneic hematopoietic stem cell transplant (HSCT) is a curative strategy for many malignant and non-malignant hematopoietic diseases, however, often at the cost of causing severe thymic dysfunction due to conditioning medications and graft-versus-host disease (GVHD). This can severely impair T cell immune reconstitution post-HSCT leading to life-threatening complications. In addition, genetic forms of congenital athymia (e.g. 22q11 Deletion Syndrome, TBX1, TBX2, PAX1, and CHD7 deficiency) can result in absence of T cell development. Complete congenital athymia is fatal early in life unless immune reconstitution is achieved by allogeneic thymus transplantation. However, the shortage of transplantable donor thymus tissue and lack of HLA-matching between donor and recipient limits the use of allogeneic thymus transplantation to a small number of children with complete congenital athymia. Thus, there is a critical unmet clinical need to provide HLA-matched thymic tissues for a larger group of patients with irreversible thymic injury and severe thymic dysfunction. Creating a regenerative thymus replacement therapy by generating functional TEPCs from induced-pluripotent stem cells (iPSCs) has been a longstanding aspiration of the transplant community. We have taken a novel approach by developing a robust in vitro TEPC differentiation protocol that sequentially induces all stages of human thymic ontogeny including bipotent third (III) pharyngeal pouch endoderm (PPEIII), ventralization of the PPE (PPEv), and TEPC commitment, usually lymphoid dependent. Here, we show that TEPCs from various iPSC-lines (tissue source, donor age and sex) express key markers of thymic epithelial fate and function, including FOXN1, PAX1, PAX9, HLA-DR. To examine their functional capacity, we transplanted iPSC-derived TEPCs under the kidney capsule of humanized (hCD34+ HSCs engrafted) athymic NSG-nude mice (NOD.scid.Il2Rγcnull, Foxn1null knockout allele). We observed robust hCD3+ development (40-60% out of hCD45 population) with CD4+ and CD8+ T cells (±70% and ±25%, respectively) at different stages of maturation (17% CD45RA+ CD45RO-, naïve; 80% CD45RA- CD45RO+, memory). Similar levels of T cells were found in mice that received human fetal thymus transplants, while T cells were not detected in NSG-nude mice without any thymus graft (primary or iPSC-derived). Mice with iPSC-derived thymus grafts had no clinical signs of autoimmunity or GVHD. In vivo matured grafts express levels of FOXN1, PAX1, PAX9, DLL4, PSMB11 and CD205 protein that are comparable to primary thymus tissue grafts. Altogether, our protocol reliably produces functional TEPCs from a diverse set of iPSCs that support T cell differentiation in vivo. We are currently characterizing the transcriptomic and epigenomic profile of iPSC-derived TEPCs on a single cell level before and after transplant. In addition, we are examining in vivo T cell function by analyzing the TCR repertoire and response to T-cell dependent antigens. We foresee that iPSC-derived TEPCs will offer a safe alternative as an HLA-matched thymic replacement therapy that will benefit a large cohort of patients, i.e. patients undergoing HSCT and patients receiving solid organ transplants in addition to patients with congenital thymic aplasia.