The generation of induced pluripotent stem (iPS) cells from somatic cells by the ectopic expression of defined transcription factors has provided the regenerative medicine field with a new tool for cell replacement strategies. The advantages that these pluripotent cells can offer in comparison to other sources of stem cells include the generation of patient-derived cells and the lack of embryonic tissue by maintaining a versatile differentiation potential. The promise of iPS cell derivatives for therapeutic applications is encouraging albeit very early in development, with the first clinical study currently ongoing in Japan. Many challenges are yet to be circumvented before this technology can be clinically translated widely though. The delivery and expression of the reprogramming factors, the genomic instability, epigenetic memory and impact of cell propagation in culture are only some of the concerns. This article aims to critically discuss the potential of iPS cells as a new source of cell therapeutics.