The assessment of skin sensitization is a crucial aspect of toxicology and regulatory safety testing, particularly for industries involving pharmaceuticals, chemicals, and cosmetics. Traditional animal-based assays, such as the Local Lymph Node Assay have been widely used for this purpose. However, these models face ethical concerns, regulatory restrictions, and limited predictive accuracy due to interspecies differences. To address these challenges, in vitro and in silico assays have been developed, but current methods only assess individual key events in the Adverse Outcome Pathway for skin sensitization, lacking a comprehensive evaluation of the sensitization process. This thesis aimed to develop a fully immunocompetent human skin model derived entirely from induced pluripotent stem cells (iPSC) to provide a more physiologically relevant and scalable alternative for skin sensitization assessment. The skin model was built using iPSC-derived fibroblasts, keratinocytes, and dendritic cells (iPSC-FB, iPSC-KC and iPSC-DC), integrated into a three-dimensional skin structure. This innovation allows for the simultaneous evaluation of multiple key events in the sensitization process, including keratinocyte activation, dendritic cell maturation, and cytokine secretion, making it a more robust and mechanistically relevant tool for the detection of skin sensitizing substances. To achieve this, hair follicle-derived keratinocytes were reprogrammed into iPSC using non-integrative Sendai virus vectors, ensuring genomic stability and ethical sourcing. These iPSC were then efficiently differentiated into functional skin-resident cells, including fibroblasts, keratinocytes, and dendritic cells. The differentiated cells exhibited characteristics comparable to their primary cell counterparts, with iPSC-FB demonstrating robust collagen secretion and extracellular matrix formation, and iPSC-KC expressing key epidermal differentiation markers. Additionally, iPSC-DC displayed antigen-presenting capabilities, as confirmed by the expression of CD86, HLA-DR, and CD209, and were able to induce allogeneic T-cell proliferation, confirming their immune functionality. The developed iPSC-derived immunocompetent skin models were functionally evaluated using a Lucifer Yellow permeability assay to confirm epidermal barrier integrity, as well as assays evaluating the cell viability. Furthermore, a skin sensitization assay was conducted, where the model was exposed to sensitizers of varying potencies, including dinitrochlorobenzene, p-phenylenediamine, isoeugenol, resorcinol and the non-sensitizer glycerol. The results demonstrated increased dendritic cell maturation and cytokine secretion (IL-8, IL-1β, MIP-1β, IL-18, TSLP, and TGF-β1) in response to sensitizers, confirming the model’s ability to distinguish between sensitizing and non-sensitizing compounds. Notably, the immunocompetent skin model outperformed conventional skin models by integrating both key event 2 (keratinocyte activation) and key event 3 (dendritic cell activation), aligning with the Adverse Outcome Pathway framework and improving predictive accuracy. This thesis represents a significant advancement in skin model development by creating a fully human, reproducible, and scalable system that eliminates the need for primary cell sourcing and animal testing. The iPSC-derived immunocompetent skin model holds broad applications in toxicology, the assessment of skin sensitizers, and disease modeling, offering a powerful platform for studying inflammatory skin conditions such as atopic dermatitis and psoriasis. Furthermore, the ability to generate patient-specific iPSC lines enables the development of personalized in vitro models for precision medicine and drug screening in the future. By providing an ethically responsible and human-relevant alternative to current testing models, this study contributes to the ongoing efforts to replace, reduce, and refine (3R principles) the use of animal testing in toxicology. The fully integrated iPSC-derived skin model presents a scalable and standardized approach for evaluating chemical sensitization, advancing both scientific research and regulatory safety assessment. Future research should focus on further refining the model for clinical applications, integrating additional immune components, and expanding its use in genetic disease modeling and personalized therapeutic testing.