Abstract: Generating animation of physics-based characters with intuitive control has long been a desirable task with numerous applications. However, generating physically simulated animations that reflect high-level human instructions remains a difficult problem due to the complexity of physical environments and the richness of human language. In this paper, we present $\textbf{InsActor}$, a principled generative framework that leverages recent advancements in diffusion-based human motion models to produce instruction-driven animations of physics-based characters.Our framework empowers InsActor to capture complex relationships between high-level human instructions and character motions by employing diffusion policies for flexibly conditioned motion planning.To overcome invalid states and infeasible state transitions in planned motions, InsActor discovers low-level skills and maps plans to latent skill sequences in a compact latent space. Extensive experiments demonstrate that InsActor achieves state-of-the-art results on various tasks, including instruction-driven motion generation and instruction-driven waypoint heading. Notably, the ability of InsActor to generate physically simulated animations using high-level human instructions makes it a valuable tool, particularly in executing long-horizon tasks with a rich set of instructions. Our project page is available at [jiawei-ren.github.io/projects/insactor/index.html](https://jiawei-ren.github.io/projects/insactor/index.html)