With their capability to undergo unlimited self-renew and to differentiate into various functional cells, human pluripotent stem cells, including embryonic stem cells (hESCs) and induced pluripotent stem cells (hiPSCs), hold great promise in regenerative medicine to treat currently incurable diseases. Significant progress has been achieved in differentiating pluripotent stem cells into various functional cells, such as pancreatic beta cells, neural cells, hepatocytes, and cardiomyocytes. In addition, three hESC-based therapies to treat spinal cord injury, macular degeneration and type 1 diabetes have entered clinical trial. However, there remain several major bottlenecks that hinder the clinical trial of stem cell based therapy. One such key challenge is the immune rejection of cells derived from allogeneic hESCs. The challenge of immune rejection is mitigated by recent discovery of iPSCs, raising the hope that patient-specific hiPSCs can be differentiated into autologous cells for transplantation into the same patient without the concern of immune rejection. However, due to the oncogenic potential of the reprogramming factors and the reprogramming-induced DNA damage, there remain safety concerns about the cancer risk and immunogenicity of hiPSC-derived cells. This review discusses recent progress in our understanding of the immunogenicity of pluripotent stem cells and the development of new strategies to resolve this challenge.