The generation of human embryonic stem cell lines in the late 1990s awakened new prospects in the research arena. The opportunity to define and direct the differentiation of the most primitive stem cells in the laboratory, and their potential application to regenerative medicine, invigorated the developmental biology field. Whilst initial studies used in vitro differentiation techniques, the application of in vivo models greatly enhanced the success of directing the differentiation of human embryonic stem cells. Controlling cell fate decisions in embryonic cells requires thorough knowledge of the intrinsic and extrinsic factors that direct differentiation and the complex cell-cell interactions that exist within different tissues. Thus, tissue-specific approaches were applied to generate various differentiated cell types. In this review, cross-species tissue recombination will be discussed as a successful approach to direct embryonic stem cell differentiation.