It has been debated whether human induced pluripotent stem cells (iPSCs) and embryonic stem cells (ESCs) express distinctive transcriptomes. By using the method of weighted gene co-expression network analysis, we showed here that iPSCs exhibit altered functional modules compared with ESCs. Notably, iPSCs and ESCs differentially express 17 modules that primarily function in transcription, metabolism, development, and immune response. These module activations (up- and downregulation) are highly conserved in a variety of iPSCs, and genes in each module are coherently co-expressed. Furthermore, the activation levels of these modular genes can be used as quantitative variables to discriminate iPSCs and ESCs with high accuracy (96%). Thus, differential activations of these functional modules are the conserved features distinguishing iPSCs from ESCs. Strikingly, the overall activation level of these modules is inversely correlated with the DNA methylation level, suggesting that DNA methylation may be one mechanism regulating the module differences. Overall, we conclude that human iPSCs and ESCs exhibit distinct gene expression networks, which are likely associated with different epigenetic reprogramming events during the derivation of iPSCs and ESCs.