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The development of human induced pluripotent stem cell (iPSC) technology has generated enthusiasm about the therapeutic potential of these cells for treating a variety of diseases. During the past few years, iPSC generation and hepatic differentiation methods have been significantly improved. These will provide an unlimited source of functional hepatocytes not only for transplantation, but for efficient drug discovery via patient relevant modeling of liver diseases and of drug-induced hepatotoxicity. Here we discuss the near future applications (and challenges) of iPSC-based cellular models, with an emphasis on liver diseases, cancer and hepatocytes.