Induced pluripotent stem (iPS) cells are generated by epigenetic reprogramming of somatic cells through the exogenous expression of transcription factors. Recently, the generation of iPS cells from patients with a variety of genetic diseases was found to likely have a major impact on regenerative medicine, because these cells self-renew indefinitely in culture while retaining the capacity to differentiate into any cell type in the body, thereby enabling disease investigation and drug development. This review focuses on the current state of iPS cell technology and discusses the potential applications of these cells for disease modeling; drug discovery; and eventually, cell replacement therapy.