Neurodevelopmental and psychiatric disorders, including autism spectrum disorder and schizophrenia, are complex and heterogeneous disorders that affect a large portion of the world's population. While the causes are still poorly understood, currently available treatments are limited; the development of rational therapeutics based on an understanding of the etiology and pathogenesis of the disease is imperative. The breakthrough technology of deriving induced pluripotent stem cells (iPSCs), reprogrammed from somatic cells of healthy subjects or patients, offers an unprecedented opportunity to recapitulate both normal and pathological development of human tissue, thereby opening up a new avenue for disease modeling and drug development in a more genetically tractable and disease-relevant system. Here, I review the recent progress in the use of human iPSCs for modeling neurodevelopmental and psychiatric disorders and developing novel therapeutic strategies, and discuss challenges in this rapidly moving field. (c) 2017 Wiley Periodicals, Inc.