In vitro culture systems that structurally model human myogenesis and promote PAX7 myogenic progenitor maturation have not been established. Here we report that human skeletal muscle organoids can be differentiated from induced pluripotent stem cell lines to contain paraxial mesoderm and neuromesodermal progenitors and develop into organized structures reassembling neural plate border and dermomyotome. Culture conditions instigate neural lineage arrest and promote fetal hypaxial myogenesis toward limb axial anatomical identity, with generation of sustainable uncommitted PAX7 myogenic progenitors and fibroadipogenic (PDGFRa+) progenitor populations equivalent to those from the second trimester of human gestation. Single-cell comparison to human fetal and adult myogenic progenitor /satellite cells reveals distinct molecular signatures for non-dividing myogenic progenitors in activated (//) and dormant (//) states. Our approach provides a robust 3D in vitro developmental system for investigating muscle tissue morphogenesis and homeostasis.