Gaucher disease (GD) is an autosomal recessive disorder caused by mutations in the acid β-glucocerebrosidase gene. To model GD, we generated human induced pluripotent stem cells (hiPSC), by reprogramming skin fibroblasts from patients with type 1 (N370S/N370S), type 2 (L444P/RecNciI), and type 3 (L444P/L444P) GD. Pluripotency was demonstrated by the ability of GD hiPSC to differentiate to all three germ layers and to form teratomas in vivo. GD hiPSC differentiated efficiently to the cell types most affected in GD, i.e., macrophages and neuronal cells. GD hiPSC-macrophages expressed macrophage-specific markers, were phagocytic, and were capable of releasing inflammatory mediators in response to LPS. Moreover, GD hiPSC-macrophages recapitulated the phenotypic hallmarks of the disease. They exhibited low glucocerebrosidase (GC) enzymatic activity and accumulated sphingolipids, and their lysosomal functions were severely compromised. GD hiPSC-macrophages had a defect in their ability to clear phagocytosed RBC, a phenotype of tissue-infiltrating GD macrophages. The kinetics of RBC clearance by types 1, 2, and 3 GD hiPSC-macrophages correlated with the severity of the mutations. Incubation with recombinant GC completely reversed the delay in RBC clearance from all three types of GD hiPSC-macrophages, indicating that their functional defects were indeed caused by GC deficiency. However, treatment of induced macrophages with the chaperone isofagomine restored phagocytosed RBC clearance only partially, regardless of genotype. These findings are consistent with the known clinical efficacies of recombinant GC and isofagomine. We conclude that cell types derived from GD hiPSC can effectively recapitulate pathologic hallmarks of the disease.