The generation of functional skeletal muscle tissues from human pluripotent stem cells (hPSCs) has not been reported. Here, we derive induced myogenic progenitor cells (iMPCs) via transient overexpression of Pax7 in paraxial mesoderm cells differentiated from hPSCs. In 2D culture, iMPCs readily differentiate into spontaneously contracting multinucleated myotubes and a pool of satellite-like cells endogenously expressing Pax7. Under optimized 3D culture conditions, iMPCs derived from multiple hPSC lines reproducibly form functional skeletal muscle tissues (iSKM bundles) containing aligned multi-nucleated myotubes that exhibit positive force-frequency relationship and robust calcium transients in response to electrical or acetylcholine stimulation. During 1-month culture, the iSKM bundles undergo increased structural and molecular maturation, hypertrophy, and force generation. When implanted into dorsal window chamber or hindlimb muscle in immunocompromised mice, the iSKM bundles survive, progressively vascularize, and maintain functionality. iSKM bundles hold promise as a microphysiological platform for human muscle disease modeling and drug development.