The generation of induced pluripotent stem cells (iPSCs) from somatic cells demonstrated that adult mammalian cells can be reprogrammed to a pluripotent state by the enforced expression of a few embryonic transcription factors. This discovery has raised fundamental questions about the mechanisms by which transcription factors influence the epigenetic conformation and differentiation potential of cells during reprogramming and normal development. In addition, iPSC technology has provided researchers with a unique tool to derive disease-specific stem cells for the study and possible treatment of degenerative disorders with autologous cells. In this review, we summarize the progress that has been made in the iPSC field over the last 4 years, with an emphasis on understanding the mechanisms of cellular reprogramming and its potential applications in cell therapy.