Induced pluripotent stem (iPS) cells are generated by epigenetic reprogramming of somatic cells through the exogenous expression of transcription factors. These cells, just like embryonic stem cells, are likely to have a major impact on regenerative medicine, because they self-renew and retain the potential to be differentiated into all cell types of the human body. In this Review, we describe the current state of iPS cell technology, including approaches by which they are generated and what is known about their biology, and discuss the potential applications of these cells for disease modeling, drug discovery, and, eventually, cell replacement therapy.