The kidneys are essential organs that filter the blood, removing urinary waste while maintaining fluid and electrolyte homeostasis. Current conventional research models such as static cell cultures and animal models are insufficient to grasp the complex human in vivo situation or lack translational value. To accelerate kidney research, novel research tools are required. Recent developments have allowed the directed differentiation of induced pluripotent stem cells to generate kidney organoids. Kidney organoids resemble the human kidney in vitro and can be applied in regenerative medicine and as developmental, toxicity, and disease models. Although current studies have shown great promise, challenges remain including the immaturity, limited reproducibility, and lack of perfusable vascular and collecting duct systems. This review gives an overview of our current understanding of nephrogenesis that enabled the generation of kidney organoids. Next, the potential applications of kidney organoids are discussed followed by future perspectives. This review proposes that advancement in kidney organoid research will be facilitated through our increasing knowledge on nephrogenesis and combining promising techniques such as organ-on-a-chip models.