In recent years, stem cells have been the subject of increasing scientific interest because of their utility in numerous biomedical applications. Stem cells are capable of renewing themselves; that is, they can be continuously cultured in an undifferentiated state, giving rise to more specialized cells of the human body such as heart, liver, bone marrow, blood vessel, pancreatic islet, and nerve cells. Therefore, stem cells are an important new tool for developing unique, in vitro model systems to test drugs and chemicals and a potential to predict or anticipate toxicity in humans. The following review provides an overview of the applications of stem cell technology in the area of toxicology. Specifically, this review addresses core technologies that are emerging in the field and how they could fulfill critical safety issues such as QT prolongation and hepatotoxicity, two leading causes of failures in preclinical development of new therapeutic drugs. We report how adult stem cells derived from various sources, such as human bone marrow and placenta, can potentially generate suitable models for cardiotoxicity, hepatotoxicity, genotoxicity/epigenetic and reproductive toxicology screens. Additionally, this review addresses the role and advantages of embryonic stem cells in the aforementioned models for toxicity and how genetic selection is employed to overcome major limitations to the implementation of stem cell-based in vitro models for toxicology.