The technology to generate autologous pluripotent stem cells (iPS cells) from almost any somatic cell type has brought various cell replacement therapies within clinical research. Besides the challenge to optimize iPS protocols to appropriate safety and GMP levels, procedures need to be developed to differentiate iPS cells into specific fully differentiated and functional cell types for implantation purposes. In this article, we describe a protocol to differentiate mouse iPS cells into oligodendrocytes with the aim to investigate the feasibility of IPS stem cell‐based therapy for demyelinating disorders, such as multiple sclerosis. Our protocol results in the generation of oligodendrocyte precursor cells (OPCs) that can develop into mature, myelinating oligodendrocytes in‐vitro (co‐culture with DRG neurons) as well as in‐vivo (after implantation in the demyelinated corpus callosum of cuprizone‐treated mice). We report the importance of complete purification of the iPS‐derived OPC suspension to prevent the contamination with teratoma‐forming iPS cells. © 2011 Wiley‐Liss, Inc.