Studies in the area of human brain development are critical as research on neurological and psychiatric disorders has advanced, revealing the origins of pathophysiology to be in the earliest developmental stages. Only with a more precise understanding of the genes and environments that influence the brain in these early stages can we address questions about the pathology, diagnosis, prevention and treatment of neuropsychiatric disorders of developmental origin, like autism, schizophrenia, and Tourette syndrome. A new approach for studying early developmental events is the use of induced pluripotent stem cells (iPSCs). These are cells with wide potential, similar to that of embryonic stem cells, derived from mature somatic cells. We review the protocols used to create iPSCs, including the most efficient and reliable reprogramming strategies available to date for generating iPSCs. In addition, we discuss how this new tool can be applied to neuropsychiatric research. The use of iPSCs can advance our understanding of how genes and gene products are dynamically involved in the formation of unique features of the human brain, and how aberrant genetic variation may interfere with its typical formation. The iPSC technology, if properly applied, can also address basic questions about neural differentiation such as how stem cells can be guided into general and specific neurodevelopmental pathways. Current work in neuropsychiatry with iPSCs derived from patients has focused on disorders with specific genetics deficits and those with less-defined origins; it has revealed previously unknown aspects of pathology and potential pharmacological interventions. These exciting advances based on the use of iPSCs hold promise for improving early diagnosis and, possibly, treatment of psychiatric disorders. This article is part of a Special Issue entitled "Special Issue in honor of Dr. Erminio Costa". This article is part of a Special Issue entitled 'Trends in Neuropharmacology: In Memory of Erminio Costa'.