Duchenne muscular dystrophy (DMD) is a progressive and fatal muscle-wasting disease caused by DYSTROPHIN deficiency. Cell therapy using muscle stem cells (MuSCs) is a potential cure. Here, we report a differentiation method to generate fetal MuSCs from human induced pluripotent stem cells (iPSCs) by monitoring MYF5 expression. Gene expression profiling indicated that MYF5-positive cells in the late stage of differentiation have fetal MuSC characteristics, while MYF5-positive cells in the early stage of differentiation have early myogenic progenitor characteristics. Moreover, late-stage MYF5-positive cells demonstrated good muscle regeneration potential and produced DYSTROPHIN in vivo after transplantation into DMD model mice, resulting in muscle function recovery. The engrafted cells also generated PAX7-positive MuSC-like cells under the basal lamina of DYSTROPHIN-positive fibers. These findings suggest that MYF5-positive fetal MuSCs induced in the late stage of iPSC differentiation have cell therapy potential for DMD.