Bipolar disorder (BP) is a chronic psychiatric condition characterized by dynamic, pathological mood fluctuations from mania to depression. To date, a major challenge in studying human neuropsychiatric conditions such as BP has been limited access to viable central nervous system tissue to examine disease progression. Patient-derived induced pluripotent stem cells (iPSCs) now offer an opportunity to analyze the full compliment of neural tissues and the prospect of identifying novel disease mechanisms. We have examined changes in gene expression as iPSC derived from well-characterized patients differentiate into neurons; there was little difference in the transcriptome of iPSC, but BP neurons were significantly different than controls in their transcriptional profile. Expression of transcripts for membrane bound receptors and ion channels was significantly increased in BP-derived neurons compared with controls, and we found that lithium pretreatment of BP neurons significantly altered their calcium transient and wave amplitude. The expression of transcription factors involved in the specification of telencephalic neuronal identity was also altered. Control neurons expressed transcripts that confer dorsal telencephalic fate, whereas BP neurons expressed genes involved in the differentiation of ventral (medial ganglionic eminence) regions. Cells were responsive to dorsal/ventral patterning cues, as addition of the Hedgehog (ventral) pathway activator purmorphamine or a dorsalizing agent (lithium) stimulated expression of NKX2-1 (ventral identity) or EMX2 (dorsal) in both groups. Cell-based models should have a significant impact on our understanding of the genesis and therefore treatment of BP; the iPSC cell lines themselves provide an important resource for comparison with other neurodevelopmental disorders.