Our current knowledge of how human tissues grow and develop is limited. We need to increase our understanding of tissue formation if we are to fully realize the potential of stem cells as a source of material for research into health and disease and possible therapeutic applications. Transplanted pluripotent human embryonic stem cells (hESCs) provide a potential system to model and investigate cell differentiation in humans. hESCs transplanted into immune‐deficient mice form complex teratomas consisting of a range of differentiated somatic tissues, some of which appear highly organized and resemble structures normally identified in the embryo and adult. Analysis of such tumors may provide a unique opportunity to study organogenesis and lead to novel approaches in bioengineering and the growth of functioning structures composed of a range of alternative cell types. However, little has been done to characterize the developmental potential of hESCs after transplantation. This concise review presents evidence for the ability of hESCs to differentiate in vivo and highlights some of the prominent questions that need to be addressed if transplantation is to be used as a research tool to study hESC differentiation.