The need for new and improved pharmacotherapies in medicine, high late-stage compound attrition in drug discovery, and upcoming patent expirations is driving interest by the pharmaceutical industry in pluripotent stem cells for in vitro modeling and early-stage testing of toxicity and target engagement. In particular, human embryonic and induced pluripotent stem cells represent potentially cost-effective and accessible sources of organ-specific cells that foretell in vivo human tissue response to new chemical entities. Here we consider the potential of these cells as novel tools for drug development, including toxicity screening and metabolic profiling. We hold that despite various challenges to translating proof-of-concept screening platforms to industrial use, the promise of research is considerable, and close to being realized.