<p>The arrival of stem cell research has brought some hope to the field of regenerative medicine. Stem cell research and therapy promises to be a viable alternative to conventional medical practices. One crucial property of stem cells is their pluripotency, which gives them the malleability to be transformed into any cell type and tissue in the adult body. In this way, stem cells can be clinically applied to repair, restore or replace damaged tissues in the adult body. Although stem cell technology is a relatively new area of science, it can be applied in a variety of ways to tackle some of the most debilitating diseases of our time. Recent evidence has shown the potential of stem cell therapy in the alleviation of different diseases such as cancer, HIV/AIDS, and spinal cord injuries. Stem cell research is a highly regulated area of science because human embryonic stem cells (hESCs) are derived from preimplantation embryos following in vitro fertilization (IVF) procedure. However, the advent of induced pluripotent stem cells (iPSCs) offers an alternative to the use of embryo-derived stem cells. The development of novel drugs has thus far been a daunting task. Pluripotent stem cells are seen as a viable and important player in novel drug development. This review discusses the recent use of iPSCs in novel drug development for different diseases such as Alzheimer’s disease and cancer. This includes the use of applications such as 3D modelling. The review concludes by looking at some of the challenges that the use of iPSCs faces during the development of novel drugs. Recommendations are also made about possible solutions to these challenges which can help to further advance the application of iPSCs.</p>