Postnatal hematopoietic stem cells (HSCs) from umbilical cord blood and adult marrow/blood have been successfully used for treating various human diseases in the past several decades. However, the availability of optimal numbers of HSCs from autologous patients or allogeneic donors with adequate match remains a great barrier to improve and extend HSC and marrow transplantation to more needing patients. In addition, the inability to expand functional human HSCs to sufficient quantity in the laboratory has hindered our research and understanding of human HSCs and hematopoiesis. Recent development in reprogramming technology has provided patient-specific pluripotent stem cells (iPSCs) as a powerful enabling tool for modeling disease and developing therapeutics. Studies have demonstrated the potential of human iPSCs, which can be expanded exponentially and amenable for genome engineering, for using in modeling both inherited and acquired blood diseases. Proof-of-principle studies have also shown the feasibility of iPSCs in gene and cell therapy. Here, we review the recent development in iPSC-based blood disease modeling, and discuss the unsolved issues and challenges in this new and promising field.