Reprogramming of somatic cells to an embryonic-like state has dramatically changed the landscape of stem cell research. Although still in its formative stages, the field of induced pluripotent stem cells (iPSCs) has the potential to advance the study of neurodegenerative and neurodevelopmental disorders at the molecular and cellular levels. The iPSC technology could be employed to establish in vitro experimental model systems for the identification of molecular lesions and to aid in the discovery of therapeutic targets and effective compounds. The derivation of patient-specific iPSCs has also opened up the possibility of generating disease-relevant cells for toxicity screening and for cellular therapy. In this article, we review the recent progress in the use of disease-specific iPSCs for in vitro and in vivo modeling of neurological diseases.