Melatonin is a neurohormone mainly extracted from the pineal gland with neuroprotective effects. It has antioxidant, anti-inflammatory, and antiapoptotic functions. However, the mechanism of melatonin against reactive oxygen species is unclear. Here, we explore the potential proliferative and neuroprotective mechanism of melatonin on induced pluripotent stem cells (iPSC)-derived neural stem cells (NSCs) exposed to hydrogen peroxide (H2O2). NSCs were induced from iPSCs, then pretreated with 500 μM H2O2, 1 μM melatonin, 1 μM melatonin receptor antagonist (Luzindole), or 10 μM Phosphatidylinositide 3 kinase (PI3K) inhibitor (LY294002). The results showed that melatonin stimulated proliferation of iPSC-derived NSCs on H2O2 exposure. Melatonin also markedly improved stabilization of the mitochondrial membrane potential and reduced the rate of apoptosis. Treatment with Luzindole or LY294002 inhibited the increasing proliferative and neuroprotective effects of melatonin on iPSC-derived NSCs with H2O2 treatment. Our results further demonstrated that these promotional effects of melatonin were related with the activity of phosphorylation of AKT. Therefore, these outcomes propose that melatonin protects iPSC-derived NSCs from H2O2-induced injury through the mediation of melatonin receptor and PI3K/AKT signaling pathway.