The thymus is a primary lymphoid organ that plays a pivotal role in immune tolerance by educating thymocytes through tight interactions with thymic epithelial cells (TECs). Deficiency in genes regulating TEC development or functionality results in a defective immune balance and severe autoimmunity as observed in the APECED syndrome caused by mutations in the AIRE gene. Cellular therapies based on induced pluripotent stem cells (iPSc) are promising approaches to treat those pathologies. Here we address the generation of functional human iPSc-derived TECs positive for AIRE expression and able to supportT cell development in vitro. We refined previous protocols allowing generation of thymic epithelial progenitors (TEPs) through an unbiased multifactorial method based on optimal experimental design and RNA-seq profiling of the cells throughout their differentiation. Modulation of signaling pathways known to control the different stages of embryonic thymus development enabled us to obtain iPSc-derived TEPs expressing typical thymic markers. We achieved the maturation of TEPs in AIRE-expressing TECs and the generation of thymic organoids by setting up a hydrogel-based 3D culture supplemented with an optimized cocktail of cytokines including RANK ligand. Finally, to assess the functionality of the generated TECs, primary early thymocytes were cocultured with the obtained organoids, resulting in a significantly improved generation of CD4 and CD8 single-positive T cells. Hence, the generation of functional TECs and thymic organoids enabling T cell development in vitro offers a platform for the study of thymic cellular interactions and paves the way for the establishment of cellular therapies for autoimmune diseases.