A lack of models that recapitulate the complexity of human bone marrow has hampered mechanistic studies of normal and malignant hematopoiesis and the validation of novel therapies. Here, we describe a step-wise, directed-differentiation protocol in which organoids are generated from induced pluripotent stem cells committed to mesenchymal, endothelial, and hematopoietic lineages. These 3D structures capture key features of human bone marrow—stroma, lumen-forming sinusoids, and myeloid cells including proplatelet-forming megakaryocytes. The organoids supported the engraftment and survival of cells from patients with blood malignancies, including cancer types notoriously difficult to maintain ex vivo. Fibrosis of the organoid occurred following TGFβ stimulation and engraftment with myelofibrosis but not healthy donor–derived cells, validating this platform as a powerful tool for studies of malignant cells and their interactions within a human bone marrow–like milieu. This enabling technology is likely to accelerate the discovery and prioritization of novel targets for bone marrow disorders and blood cancers. Significance: We present a human bone marrow organoid that supports the growth of primary cells from patients with myeloid and lymphoid blood cancers. This model allows for mechanistic studies of blood cancers in the context of their microenvironment and provides a much-needed ex vivo tool for the prioritization of new therapeutics. See related commentary by Derecka and Crispino, p. 263. This article is highlighted in the In This Issue feature, p. 247