Differentiation of human pluripotent stem cells (hPSCs) into organ-specific subtypes offers an exciting avenue for the study of embryonic development and disease processes, for pharmacologic studies and as a potential resource for therapeutic transplant. To date, limited in vivo models exist for human intestine, all of which are dependent upon primary epithelial cultures or digested tissue from surgical biopsies that include mesenchymal cells transplanted on biodegradable scaffolds. Here, we generated human intestinal organoids (HIOs) produced in vitro from human embryonic stem cells (ESCs) or induced pluripotent stem cells (iPSCs) that can engraft in vivo. These HIOs form mature human intestinal epithelium with intestinal stem cells contributing to the crypt-villus architecture and a laminated human mesenchyme, both supported by mouse vasculature ingrowth. In vivo transplantation resulted in marked expansion and maturation of the epithelium and mesenchyme, as demonstrated by differentiated intestinal cell lineages (enterocytes, goblet cells, Paneth cells, tuft cells and enteroendocrine cells), presence of functional brush-border enzymes (lactase, sucrase-isomaltase and dipeptidyl peptidase 4) and visible subepithelial and smooth muscle layers when compared with HIOs in vitro. Transplanted intestinal tissues demonstrated digestive functions as shown by permeability and peptide uptake studies. Furthermore, transplanted HIO-derived tissue was responsive to systemic signals from the host mouse following ileocecal resection, suggesting a role for circulating factors in the intestinal adaptive response. This model of the human small intestine may pave the way for studies of intestinal physiology, disease and translational studies.