Pluripotent stem cells are able to self-renew indefinitely and differentiate into all types of cells in the body. They can thus be an inexhaustible source for future cell transplantation therapy to treat degenerative diseases which currently have no cure. However, non-autologous cells will cause immune rejection. Induced pluripotent stem cell (iPSC) technology can convert somatic cells to the pluripotent state, and therefore offers a solution to this problem. Since the first generation of iPSCs, there has been an explosion of relevant research, from which we have learned much about the genetic networks and epigenetic landscape of pluripotency, as well as how to manipulate genes, epigenetics, and microRNAs to obtain iPSCs. In this review, we focus on the mechanism of cellular reprogramming and current methods to induce pluripotency. We also highlight new problems emerging from iPSCs. Better understanding of the fundamental mechanisms underlying pluripotenty and refining the methodology of iPSC generation will have a significant impact on future development of regenerative medicine.