Differentiated somatic cells can be reprogrammed to a pluripotent state through ectopic expression of specific transcription factors. These reprogrammed cells, which were designated as induced pluripotent stem (iPS) cells, are detected to exhibit unlimited self-renewal capacity and pluripotency. This breakthrough in stem cell research provides a powerful and novel tool for the studies on pathogenesis of diseases, reprogramming mechanism and development of new therapies. For this reason, the iPSC technology has currently become one of the hot topics in stem cells research. Recently, major progress in this field has been achieved: initially, researchers succeeded in inducing the reprogramming of mouse fibroblasts by retroviral transduction of four specific transcription factors; in succession, the accelerated development of iPSC technology by employing non-integrating viral vectors, non-viral vectors or removing the introduced foreign genes via gene knock-out has ensured the yields of much safer iPSC; meanwhile, some researches discovered the proofs that a number of micro molecular compounds were potent in accelerating the cellular reprogramming. For a prospect, iPSC are highly promising for regenerative medicine, disease modeling and drug screening. In this review, the recent progress in the generation of iPSC, prospects of their possible clinical applications and problems in the iPSC research are summarized and discussed.