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The pathophysiology of schizophrenia and bipolar disorder involves a complex interaction between genetic and environmental factors that begins in the early stages of neurodevelopment. Recent advancements in the field of induced pluripotent stem cells (iPSCs) offer a promising tool for understanding the neurobiological alterations involved in these disorders and, potentially, for developing new treatment options. In this review, we summarize the results of iPSC-based research on schizophrenia and bipolar disorder, showing disturbances in neurodevelopmental processes, imbalance in glutamatergic-GABAergic transmission and neuromorphological alterations. The limitations of the reviewed literature are also highlighted, particularly the methodological heterogeneity of the studies, the limited number of studies developing iPSC models of both diseases simultaneously, and the lack of in-depth clinical characterization of the included samples. Further studies are needed to advance knowledge on the common and disease-specific pathophysiological features of schizophrenia and bipolar disorder and to promote the development of new treatment options., Competing Interests: Competing interests:: Silvana Galderisi reports consulting fees from Gedeon Richter; honoraria from Angelini, Boehringer Ingelheim, Gedeon Richter, Janssen, Lundbeck, Otsuka, Recordati, Rovi, and Sunovion; and participation on data safety monitoring boards with Angelini, Boehringer Ingelheim, Janssen, and Rovi. Giulia Maria Giordano reports consulting fees from Angelini. Armida Mucci reports consulting fees from Pierre Fabre, Rovi, and Boehringer Ingelheim; patents with Pierre Fabre; and participation on data safety monitoring boards with Angelini and Boehringer Ingelheim. No other competing interests were declared., (© 2024 CMA Impact Inc. or its licensors.)