Pluripotent stem cells, embryonic stem (ES) cells and induced pluripotent stem (iPS) cells, both hold great promise for the understanding and treatment of disease. They can be used for drug testing, as in vitro models for human disease progression, and for transplantation therapies. Research in this area has been influenced by the ever-changing political landscape, particularly in the United States. In this review, we discuss the prospects for clinical application using pluripotent cells, focusing on an evaluation of iPS cell potential, the continuing concern of tumor formation, and a summary of in vitro differentiation protocols and animal models used. We also describe the current clinical trials underway in the United States, as well as the ups and downs of funding for ES cell work. J. Cell. Biochem. 113: 381–387, 2012. © 2011 Wiley Periodicals, Inc.