Organoids made from dissociated progenitor cells undergo tissue-like organization. This in vitro self-organization process is not identical to embryonic organ formation, but it achieves a similar phenotype in vivo. This implies genetic codes do not specify morphology directly; instead, complex tissue architectures may be achieved through several intermediate layers of cross talk between genetic information and biophysical processes. Here we use newborn and adult skin organoids for analyses. Dissociated cells from newborn mouse skin form hair primordia-bearing organoids that grow hairs robustly in vivo after transplantation to nude mice. Detailed time-lapse imaging of 3D cultures revealed unexpected morphological transitions between six distinct phases: dissociated cells, cell aggregates, polarized cysts, cyst coalescence, planar skin, and hair-bearing skin. Transcriptome profiling reveals the sequential expression of adhesion molecules, growth factors, Wnts, and matrix metalloproteinases (MMPs). Functional perturbations at different times discern their roles in regulating the switch from one phase to another. In contrast, adult cells form small aggregates, but then development stalls in vitro. Comparative transcriptome analyses suggest suppressing epidermal differentiation in adult cells is critical. These results inspire a strategy that can restore morphological transitions and rescue the hair-forming ability of adult organoids: (i) continuous PKC inhibition and (ii) timely supply of growth factors (IGF, VEGF), Wnts, and MMPs. This comprehensive study demonstrates that alternating molecular events and physical processes are in action during organoid morphogenesis and that the self-organizing processes can be restored via environmental reprogramming. This tissue-level phase transition could drive self-organization behavior in organoid morphogenies beyond the skin.