This review article highlights several studies that were published in 2011 and 2012 regarding the use of human stem cells to study Alzheimer’s disease. Alzheimer’s disease (AD) is the most common form of dementia and, despite many years of research, there is no cure. Human stem cells represent a new technology being used to study AD with the hope that new, effective treatments can be developed. Human stem cells can be differentiated into all cell types, including neurons, which are primarily affected in AD. Several studies have demonstrated that human stem cells made from AD patients are able to effectively differentiate into neurons and recapitulate cellular characteristics of AD in the laboratory. When these cells are treated with small molecules, these characteristics are altered, which shows the usefulness of this system for potentially screening new drugs. This review also discusses the current challenges facing this field of research, including examining other cells from the central nervous system, such as astrocytes, modifying stem cells to remove disease-causing genes, and analyzing stem cells from many different individuals with sporadic disease.