Lineage-restricted cells can be reprogrammed to a pluripotent state through overexpression of defined transcription factors. Here, we summarize recent progress in the direct reprogramming field and discuss data comparing embryonic stem (ES) and induced pluripotent stem (iPS) cells. Results from many independent groups suggest that mouse and human iPS cells, once established, generally exhibit a normal karyotype, are transcriptionally and epigenetically similar to ES cells and maintain the potential to differentiate into derivatives of all germ layers. Recent developments provide optimism that safe, viral-free human iPS cells could be derived routinely in the near future. An important next step will be to identify ways of assessing which iPS cell lines are sufficiently reprogrammed and safe to use for therapeutic applications. The approach of generating patient-specific pluripotent cells will undoubtedly transform regenerative medicine in many ways.