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Advances in regenerative medicine technologies will lead to dramatic changes in how patients in rehabilitation medicine clinics are treated in the upcoming decades. The multidisciplinary field of regenerative medicine is developing new tools for disease modeling and drug discovery based on induced pluripotent stem cells. This approach capitalizes on the idea of personalized medicine by using the patient’s own cells to discover new drugs, increasing the likelihood of a favorable outcome. The search for compounds that can correct disease defects in the culture dish is a conceptual departure from how drug screens were done in the past. This system proposes a closed loop from sample collection from the diseased patient, to in vitro disease model, to drug discovery and Food and Drug Administration approval, to delivering that drug back to the same patient. Here, recent progress in patient-specific induced pluripotent stem cell derivation, directed differentiation toward diseased cell types, and how those cells can be used for high-throughput drug screens are reviewed. Given that restoration of normal function is a driving force in rehabilitation medicine, the authors believe that this drug discovery platform focusing on phenotypic rescue will become a key contributor to therapeutic compounds in regenerative rehabilitation.