Limb development starts with the formation of limb buds (LBs), which consist of tissues from two different germ layers; the lateral plate mesoderm-derived mesenchyme and ectoderm-derived surface epithelium. Here, we report means for induction of an LB-like mesenchymal/epithelial complex tissues from murine pluripotent stem cells (PSCs) in vitro. The LB-like tissues selectively differentiate into forelimb- or hindlimb-type mesenchymes, depending on a concentration of retinoic acid. Comparative transcriptome analysis reveals that the LB-like tissues show similar gene expression pattern to that seen in LBs. We also show that manipulating BMP signaling enables us to induce a thickened epithelial structure similar to the apical ectodermal ridge. Finally, we demonstrate that the induced tissues can contribute to endogenous digit tissue after transplantation. This PSC technology offers a first step for creating an artificial limb bud in culture and might open the door to inducing other mesenchymal/epithelial complex tissues from PSCs.