Researchers of the Institute of Neurophysiology and Centre for Molecular Medicine Cologne (CMMC), University of Cologne (UKK) and Leibniz Research Centre for Working Environment and Human Factors, Technical University of Dortmund (IfADo) have just published a paper in Trends in Molecular Medicine showing that hiPSC differentiation protocols theoretically offer the prospect of an unlimited supply of all human cell types. However, to fully exploit this opportunity, two major challenges must be overcome, namely unwanted and incomplete differentiation.Current research is addressing the challenges of unwanted and incomplete differentiation by specific modification of factors that control transcriptional networks.Differentiation protocols are not yet optimal, still, hiPSCs may be valuable tools in preclinical safety evaluation; this requires the use of gold standard compounds, pathway controls, and iterative cycles of optimization and validation based on specific performance metrics of the in vitro test system.Transcriptome-based indices allow the identification of developmental toxicants.Much progress has been made in establishing strategies for differentiation of induced human pluripotent stem cells (hiPSCs). However, differentiated hiPSCs are not yet routinely used for prediction of toxicity. Here, limiting factors are summarised and possibilities for improvement are discussed, with a focus on hepatocytes, cardiomyocytes, tubular epithelial cells, and developmental toxicity. Moreover, we make recommendations for further fine-tuning of differentiation protocols for hiPSCs to hepatocyte-like cells by comparing individual steps of currently available protocols to the mechanisms occurring during embryonic development. A road map is proposed to facilitate test system development, including a description of the most useful performance metrics.