Studies of human hair follicle (HF) induction by follicle-derived cells have been limited due to a lack of suitable test systems. In this study, we established a skin organ culture system which supports HF formation by follicle-derived cells. Long-term skin organ cultures were set up from human retroauricular skin specimens and maintained in culture for up to 8 weeks. In vitro expanded human HF-derived cells from the dermal papilla (DP) and the outer root sheath (ORS) were injected together into the skin specimens and evaluated for their ability to induce reorganization of HFs. Macroscopic analysis of the cultured skin specimens demonstrated the growth of velus-like hair after 4 weeks in culture. Histologic evaluation of the cultured skin specimens after 8 weeks of culture revealed multiple miniaturized HFs with sebaceous glands. In addition, cell clusters of various differentiation stages could be demonstrated in serial sections of the cultured skin specimens. Labeling of HF-derived cells with the fluorescence dye CFDA-1 prior to injection suggested a de novo reorganization of HFs out of the injected cells. In conclusion, the study demonstrated HF formation by HF-derived cells in an in vitro skin organ culture model.