The polygenic and multifactorial nature of many psychiatric disorders has hampered the personalized medicine approach implementation in clinical practice. However, induced pluripotent stem cell (iPSC) technology has emerged as an innovative tool for patient-specific disease modeling to expand the pathophysiology knowledge and treatment perspectives in the last decade. Current technologies enable adult human somatic cell reprogramming into induced pluripotent stem cells (iPSCs) to generate neural cells and direct neural cell conversion to model organisms that exhibit phenotypes close to human diseases, thereby effectively representing relevant aspects of neuropsychiatric disorders. iPSCs reflect patient pathophysiology and pharmacological responsiveness, particularly when cultured under conditions that recapitulate spatial tissue organization in brain organoids. Recently, the application of iPSCs has been frequently associated with gene editing that targets the disease-causing gene to deepen the illness pathophysiology and conduct drug screening. Moreover, gene editing has provided a unique opportunity to repair the putative causative genetic lesions in patient-derived cells. Here, we review the use of iPSC technology to model and potentially treat neuropsychiatric disorders by illustrating the key studies on a series of mental disorders, including schizophrenia, major depression disorder, bipolar disorder, and autism spectrum disorder. The future perspective will involve the development of organ-on-a-chip platforms that control the microenvironmental conditions to reflect individual pathophysiological by adjusting physiochemical parameters according to personal health data. This strategy could open new ways to build a disease model that considers individual variability and tailors personalized treatments.