Although the majority of Alzheimer's disease (AD) cases are sporadic, about 5% of cases are inherited in an autosomal dominant pattern as familial AD (FAD) and manifest at an early age. Mutations in the presenilin 1 (PSEN1) gene account for the majority of early-onset FAD. Here, we describe the generation of virus-free human induced pluripotent stem cells (hiPSCs) derived from fibroblasts of patients harboring the FAD PSEN1 mutation A246E and fibroblasts from healthy age-matched controls using nonintegrating episomal vectors. We have differentiated these hiPSC lines to the neuronal lineage and demonstrated that hiPSC-derived neurons have mature phenotypic and physiological properties. Neurons from mutant hiPSC lines express PSEN1-A246E mutations themselves and show AD-like biochemical features, that is, amyloidogenic processing of amyloid precursor protein (APP) indicated by an increase in β-amyloid (Aβ)42/Aβ40 ratio. FAD hiPSCs harboring disease properties can be used as humanized models to test novel diagnostic methods and therapies and explore novel hypotheses for AD pathogenesis.