Microglia, the immune cells of the central nervous system (CNS), play critical roles in CNS homeostasis and disease. Mounting evidence has linked aberrant microglial functions to neurodevelopment, neuroinflammatory and neurodegenerative diseases, underlining the need for novel models to investigate human microglia biology. Here we describe a protocol for generating in vitro patient-specific microglia progenitors and microglia-like cells from induced pluripotent stem cells (iPSCs). Our protocol generates microglia progenitor cells in approximately 35 days, which then can further mature into microglia-like cells within two additional weeks. Microglia differentiation is driven by specific growth factors and cytokines in serum-free conditions, resulting in mesodermal progenitors that grow in a monolayer which releases free-floating microglia progenitors. Isolated progenitors can be used in co-culture systems with other neuronal cells, xenotransplanted to generate chimeric mouse models, or further differentiated into adherent microglia-like cells for functional studies.