Human brain organoids provide unique platforms for modeling several aspects of human brain development and pathology. However, current brain organoid systems mostly lack the resolution to recapitulate the development of finer brain structures with subregional identity, including functionally distinct nuclei in the thalamus. Here, we report a method for converting human embryonic stem cells (hESCs) into ventral thalamic organoids (vThOs) with transcriptionally diverse nuclei identities. Notably, single-cell RNA sequencing revealed previously unachieved thalamic patterning with a thalamic reticular nucleus (TRN) signature, a GABAergic nucleus located in the ventral thalamus. Using vThOs, we explored the functions of TRN-specific, disease-associated genes patched domain containing 1 (PTCHD1) and receptor tyrosine-protein kinase (ERBB4) during human thalamic development. Perturbations in PTCHD1 or ERBB4 impaired neuronal functions in vThOs, albeit not affecting the overall thalamic lineage development. Together, vThOs present an experimental model for understanding nuclei-specific development and pathology in the thalamus of the human brain. © 2023 Elsevier Inc.