Stem cells are unique pools of cells that are crucial for embryonic development and maintenance of adult tissue homeostasis. The landmark Nobel Prize winning research by Yamanaka and colleagues to induce pluripotency in somatic cells has reshaped the field of stem cell research. The complications related to the usage of pluripotent embryonic stem cells (ESCs) in human medicine, particularly ESC isolation and histoincompatibility were bypassed with induced pluripotent stem cell (iPSC) technology. The human iPSCs can be used for studying embryogenesis, disease modeling, drug testing and regenerative medicine. iPSCs can be diverted to different cell lineages using small molecules and growth factors. In this review we have focused on iPSC differentiation towards cardiac and neuronal lineages. Moreover, we deal with the use of iPSCs in regenerative medicine and modeling diseases like myocardial infarction, Timothy syndrome, dilated cardiomyopathy, Parkinson’s, Alzheimer’s and Huntington’s disease. Despite the promising potential of iPSCs, genome contamination and low efficacy of cell reprogramming remain significant challenges.