Stem cell replacement is providing hope for many degenerative diseases that lack effective therapeutic methods including multiple sclerosis (MS), an inflammatory demyelinating disease of the central nervous system. Transplantation of neural stem cells or mesenchymal stem cells is a potential therapy for MS thanks to their capacity for cell repopulation as well as for their immunomodulatory and neurotrophic properties. Induced pluripotent stem cell (iPSC), an emerging cell source in regenerative medicine, is also being tested for the treatment of MS. Remarkable improvement in mobility and robust remyelination have been observed after transplantation of iPSC-derived neural cells into demyelinated models. Direct reprogramming of somatic cells into induced neural cells, such as induced neural stem cells (iNSCs) and induced oligodendrocyte progenitor cells (iOPCs), without passing through the pluripotency stage, is an alternative for transplantation that has been proved effective in the congenital hypomyelination model. iPSC technology is rapidly progressing as efforts are being made to increase the efficiency of iPSC therapy and reduce its potential side effects. In this review, we discuss the recent advances in application of stem cells, with particular focus on induced stem/progenitor cells (iPSCs, iNSC, iOPCs), which are promising in the treatment of MS.