Neuropsychiatric disorders place an enormous medical burden on patients across all social and economic ranks. The current understanding of the molecular and cellular causes of neuropsychiatric disease remains limited, which leads to a lack of targeted therapies. Human-induced pluripotent stem cell (iPSC) technology offers a novel platform for modeling the genetic contribution to mental disorders and yields access to patient-specific cells for drug discovery and personalized medicine. Here, we review recent progress in using iPSC technology to model and potentially treat neuropsychiatric disorders by focusing on the most prevalent conditions in psychiatry, including depression, anxiety disorders, bipolar disorder and schizophrenia.