Medium-sized spiny neurons (MSNs) are the only neostriatum projection neurons, and their degeneration underlies some of the clinical features of Huntington's disease. Using knowledge of human developmental biology and exposure to key neurodevelopmental molecules, human pluripotent stem (hPS) cells were induced to differentiate into MSNs. In a feeder-free adherent culture, ventral telencephalic specification is induced by BMP/TGFβ inhibition and subsequent SHH/DKK1 treatment. The emerging FOXG1(+)/GSX2(+) telencephalic progenitors are then terminally differentiated, resulting in the systematic line-independent generation of FOXP1(+)/FOXP2(+)/CTIP2(+)/calbindin(+)/DARPP-32(+) MSNs. Similar to mature MSNs, these neurons carry dopamine and A2a receptors, elicit a typical firing pattern and show inhibitory postsynaptic currents, as well as dopamine neuromodulation and synaptic integration ability in vivo. When transplanted into the striatum of quinolinic acid-lesioned rats, hPS-derived neurons survive and differentiate into DARPP-32(+) neurons, leading to a restoration of apomorphine-induced rotation behavior. In summary, hPS cells can be efficiently driven to acquire a functional striatal fate using an ontogeny-recapitulating stepwise method that represents a platform for in vitro human developmental neurobiology studies and drug screening approaches.