No wonder there is an urgent need for new therapeutic developments having clinical application in treating the disorders associated with the central nervous system. In light of this, various studies are under pipeline which focuses on diseases like Parkinson’s, traumatic brain injury, stroke, and many more. Developments have been carried out where cell therapy using induced pluripotent stem cells (iPS) have been used as a breakthrough. The use of induced pluripotent stem cells for neurorestoration through transplantation has paved a new path in the clinical applications treating neurological disorders. Besides this, iPS cells for long have served as a robust biological system for the development of various therapeutic drugs. Thus, providing deeper insights into the pathological conditions and potential mechanism for its treatment. Even after many recent advances in cell therapies using iPS, the mesenchymal stem cells derived from adult tissues remain one of the popular options as the donor for cell transplantation. In this review article, the breakthrough research made using cell therapy for neurological disorders is discussed along with a detailed understanding of the obstacles in clinical application of therapy and subsequent solutions.