The diencephalon, an integral component of the forebrain, governs a spectrum of crucial functions, ranging from sensory processing to emotional regulation. Yet, unraveling its unique development, intricate connectivity, and its role in neurodevelopmental disorders has long been hampered by the scarcity of human brain tissue and ethical constraints. Recent advancements in stem cell technology, particularly the emergence of brain organoids, have heralded a new era in neuroscience research. Although most brain organoid methodologies have hitherto concentrated on directing stem cells toward telencephalic fates, novel techniques now permit the generation of region-specific brain organoids that faithfully replicate precise diencephalic identities. These models mirror the complexity of the human diencephalon, providing unprecedented opportunities for investigating diencephalic development, functionality, connectivity, and pathophysiology . This review summarizes the development, function, and connectivity of diencephalic structures and touches upon developmental brain disorders linked to diencephalic abnormalities. Furthermore, it presents current diencephalic organoid models and their applications in unraveling the intricacies of diencephalic development, function, and pathology in humans. Lastly, it highlights thalamocortical assembloid models, adept at capturing human-specific aspects of thalamocortical connections, along with their relevance in neurodevelopmental disorders.