ABSTRACT Body skeletal muscles derive from the paraxial mesoderm, which forms in the posterior region of the embryo. Using microarrays, we characterize novel mouse presomitic mesoderm (PSM) markers and show that, unlike the abrupt transcriptome reorganization of the PSM, neural tube differentiation is accompanied by progressive transcriptome changes. The early paraxial mesoderm differentiation stages can be efficiently recapitulated in vitro using mouse and human pluripotent stem cells. While Wnt activation alone can induce posterior PSM markers, acquisition of a committed PSM fate and efficient differentiation into anterior PSM Pax3+ identity further requires BMP inhibition to prevent progenitors from drifting to a lateral plate mesoderm fate. When transplanted into injured adult muscle, these precursors generated large numbers of immature muscle fibers. Furthermore, exposing these mouse PSM-like cells to a brief FGF inhibition step followed by culture in horse serum-containing medium allows efficient recapitulation of the myogenic program to generate myotubes and associated Pax7+ cells. This protocol results in improved in vitro differentiation and maturation of mouse muscle fibers over serum-free protocols and enables the study of myogenic cell fusion and satellite cell differentiation.