One of the paramount goals in reproductive biology is to produce functional oocytes in culture through a series of differentiation processes that accurately mimic those in vivo. Such a culture system would provide a larger number of oocytes than those available in vivo, which would be of help in the elucidation of mechanisms underlying germ cell development. All germ cells originate from a small group of primordial germ cells (PGCs) that segregate from somatic cell lineages at an early developmental stage. Recently, we developed a culture system in which embryonic stem cells (ESCs) and induced pluripotent stem cells (iPSCs) differentiate into PGC-like cells (PGCLCs) through an epiblast-like cell population. PGCLCs are capable of differentiating into functional oocytes when transplanted into the ovarian bursa with E12.5 gonadal somatic cells. In this review, we introduce our differentiation method and discuss possible applications of this culture system.