Pluripotent stem cells (PSCs) hold great promise for drug discovery and regenerative medicine owing to their ability to differentiate into any cell type in the body. After more than three decades of research, including delays due to the potential tumorigenicity of PSCs and inefficiencies in differentiation methods, the field is at a turning point, with a number of clinical trials across the globe now testing PSC-derived products in humans. Ocular diseases dominate these first-in-man trials, and Phase l/ll results are showing promising safety data as well as possible efficacy. In addition, the advent of induced PSC (iPSC) technology is enabling the development of a wide range of cell-based disease models from genetically predisposed patients, thereby facilitating drug discovery. In this Review, we discuss the recent progress and remaining challenges for the use of PSCs in regenerative medicine and drug development.