Childhood-onset schizophrenia (COS) is a rare psychiatric disorder characterized by earlier onset, more severe course, and poorer outcome relative to adult-onset schizophrenia (AOS). Even though, clinical, neuroimaging, and genetic studies support that COS is continuous to AOS. Early neurodevelopmental deviations in COS are thought to be significantly mediated through poorly understood genetic risk factors that may also predispose to long-term outcome. In this review, we discuss findings from induced pluripotent stem cells (iPSCs) that allow the generation of disease-relevant cell types from early brain development. Because iPSCs capture each donor’s genotype, case/control studies can uncover molecular and cellular underpinnings of COS. Indeed, recent studies identified alterations in neural progenitor and neuronal cell function, comprising dendrites, synapses, electrical activity, glutamate signaling, and miRNA expression. Interestingly, transcriptional signatures of iPSC-derived cells from patients with COS showed concordance with postmortem brain samples from SCZ, indicating that changes in vitro may recapitulate changes from the diseased brain. Considering this progress, we discuss also current caveats from the field of iPSC-based disease modeling and how to proceed from basic studies to improved diagnosis and treatment of COS.