After reprogramming of somatic, patient-derived cells to an induced pluripotent state, iPSCs can be differentiated into cell types of all three germ layers, allowing regeneration of tissue and posing great hopes for clinical translation of iPSCs and treatment of many diseases. Also, iPSC-derived tissue-specific cells may be employed for modeling diseases to understand the complex mechanisms underlying various diseases, and for assessing cytotoxicity of small chemicals in drug development. This illustrates how iPSCs provide an improved model system for disease modeling, high-throughput drug screening, and toxicity testing.