Aplastic Anemia (AA) is a bone marrow failure (BMF) disorder, resulting in bone marrow hypocellularity and peripheral pancytopenia. Severe aplastic anemia (SAA) is a subset of AA defined by a more severe phenotype. Although the immunological nature of SAA pathogenesis is widely accepted, there is an increasing recognition of the role of dysfunctional hematopoietic stem cells in the disease phenotype. While pediatric SAA can be attributable to genetic causes, evidence is evolving on previously unrecognized genetic etiologies in a proportion of adults with SAA. Thus, there is an urgent need to better understand the pathophysiology of SAA, which will help to inform the course of disease progression and treatment options. We have derived induced pluripotent stem cell (iPSC) from three unaffected controls and three SAA patients and have shown that this in vitro model mimics two key features of the disease: (1) the failure to maintain telomere length during the reprogramming process and hematopoietic differentiation resulting in SAA-iPSC and iPSC-derived-hematopoietic progenitors with shorter telomeres than controls; (2) the impaired ability of SAA-iPSC-derived hematopoietic progenitors to give rise to erythroid and myeloid cells. While apoptosis and DNA damage response to replicative stress is similar between the control and SAA-iPSC-derived-hematopoietic progenitors, the latter show impaired proliferation which was not restored by eltrombopag, a drug which has been shown to restore hematopoiesis in SAA patients. Together, our data highlight the utility of patient specific iPSC in providing a disease model for SAA and predicting patient responses to various treatment modalities.