Induced pluripotent stem cells (iPSCs) can be derived from many mouse and human somatic cell types by forced expression of a small number of defined reprogramming factors. This technology holds great promue for patient-specific cell therapy. However, the current technology for generating pluripotent cells by gene transduction is impractical for producing a clinically reliable stem-cell source. As a research tool, iPSC technology would undoubtedly stimulate the development of human disease research and provide an unprecedented opportunity for tumor research. This review presents the biological features of iPSCs by comparing them with embryonic stem cells, and we discuss several key issues around the production of clinically reliable iPSCs by summarizing the research to date. Finally, we explore how iPSC technology could be extensively applied in human disease research, including research on tumors.