The discovery of human pluripotent stem cells has laid the foundation for an emerging new field of biomedical research that holds promise to develop models of human development and disease, establish new strategies for discovering and testing drugs, and provide systems for the generation of cells and tissues for transplantation for the treatment of disease. The remarkable potential of pluripotent stem cells has sparked interest and excitement in academia, the biotechnology and pharmaceutical industries, as well as the lay public. Although the potential of human pluripotent stem cells is truly outstanding, fulfilling this potential is solely dependent on our ability to efficiently generate functional cell types from them. Some of the most successful approaches in this area to date are those that have applied the principles of developmental biology to stem cell differentiation. In this chapter, we review these concepts and highlight specific examples demonstrating that pluripotent stem cell differentiation in culture recapitulates the key aspects of early embryonic development. By continuing to translate insights from embryology to stem cell biology, progress in our ability to generate specific cell types from pluripotent stem cells will advance, yielding enriched populations of human cell types, including cardiomyocytes, hematopoietic cells, hepatocytes, pancreatic beta cells, and neural cells, for drug discovery, functional evaluation in preclinical models of human disease, and ultimately clinical applications.