Induced pluripotent stem cells (iPSCs) hold great hopes for therapeutic application in various diseases. Although ongoing research is dedicated to achieving clinical translation of iPSCs, further understanding of the mechanisms that underlie complex pathogenic conditions is required. Compared with other classical models for studying diseases, iPSCs provide considerable advantages. A newly emerging application of iPSCs is in vitro disease modeling, which can significantly improve the never-ending search for new pharmacological cures. Here, we will discuss current efforts to create iPSC-dependent patient-specific disease models. Furthermore, we will review the use of iPSCs for development and testing of new therapeutic agents and the implications for high-throughput drug screening.