Various human diseases and pregnancy-related disorders reflect endometrial dysfunction. However, rodent models do not share fundamental biological processes with the human endometrium, such as spontaneous decidualization, and no existing human cell cultures recapitulate the cyclic interactions between endometrial stromal and epithelial compartments necessary for decidualization and implantation. Here we report a protocol differentiating human pluripotent stem cells into endometrial stromal fibroblasts (PSC-ESFs) that are highly pure and able to decidualize. Coculture of PSC-ESFs with placenta-derived endometrial epithelial cells generated organoids used to examine stromal-epithelial interactions. Cocultures exhibited specific endometrial markers in the appropriate compartments, organization with cell polarity, and hormone responsiveness of both cell types. Furthermore, cocultures recapitulate a central feature of the human decidua by cyclically responding to hormone withdrawal followed by hormone retreatment. This advance enables mechanistic studies of the cyclic responses that characterize the human endometrium.