Purpose of review The lack of effective treatments for various neurodegenerative disorders has placed huge burdens on society. We review the current status in applying induced pluripotent stem cell (iPSC) technology for the cellular therapy, drug screening, and in-vitro modeling of neurodegenerative diseases. Recent findings iPSCs are generated from somatic cells by overexpressing four reprogramming factors (Oct4, Sox2, Klf4, and Myc). Like human embryonic stem cells, iPSCs have features of self-renewal and pluripotency, and allow in-vitro disease modeling, drug screening, and cell replacement therapy. Disease-specific iPSCs were derived from patients of several neurodegenerative diseases, including Parkinson's disease, Alzheimer's disease, amyotrophic lateral sclerosis, and spinal muscular atrophy. Neurons differentiated from these iPSCs recapitulated the in-vivo phenotypes, providing platforms for drug screening. In the case of Parkinson's disease, iPSC-derived dopaminergic neurons gave positive therapeutic effect on a rodent Parkinson's disease model as a proof of principle in using iPSCs as sources of cell replacement therapy. Beyond iPSC technology, much effort is being made to generate neurons directly from dermal fibroblasts with neuron-specific transcription factors, which does not require making iPSCs as an intermediate cell type. Summary We summarize recent progress in using iPSCs for modeling the progress and treatment of neurodegenerative diseases and provide evidence for future perspectives in this field.