It has been demonstrated that mouse and human somatic cells can be reprogrammed into an embryonic stem cell-like state by introducing combinations of the transcription factors. The generation of such induced pluripotent stem cells (iPSCs) has enabled the derivation of disease-specific pluripotent cells which opens up new avenues of disease modeling and provides valuable experimental platforms. Moreover, technologies for creating humanized animal models by human iPSCs will be available as well, which will increase the utility of humanized mice for research. Emerging evidences suggest, however, that immunogenicity of iPSCs seems to be a vital and controversial issue surrounding potential of iPSCs. Recent studies on induced multipotent progenitor cells (iMPCs) extend the applications of iPSC technology and provide promising candidates for disease modeling. In this review, we introduce a wide range of applications of iPSCs in disease modeling and discuss the immune response on the use of iPSCs as well as a promising alternative for future directions of disease modeling.