The loss of glomerular podocytes is a key event in the progression of chronic kidney disease resulting in proteinuria and declining function. Podocytes are slow cycling cells that are considered terminally differentiated. Here we provide the first report of the directed differentiation of induced pluripotent stem (iPS) cells to generate kidney cells with podocyte features. The iPS-derived podocytes share a morphological phenotype analogous with cultured human podocytes. Following 10 days of directed differentiation, iPS podocytes had an up-regulated expression of mRNA and protein localization for podocyte markers including synaptopodin, nephrin and Wilm's tumour protein (WT1), combined with a down-regulation of the stem cell marker OCT3/4. In contrast to human podocytes that become quiescent in culture, iPS-derived cells maintain a proliferative capacity suggestive of a more immature phenotype. The transduction of iPS podocytes with fluorescent labeled-talin that were immunostained with podocin showed a cytoplasmic contractile response to angiotensin II (AII). A permeability assay provided functional evidence of albumin uptake in the cytoplasm of iPS podocytes comparable to human podocytes. Moreover, labeled iPS-derived podocytes were found to integrate into reaggregated metanephric kidney explants where they incorporated into developing glomeruli and co-expressed WT1. This study establishes the differentiation of iPS cells to kidney podocytes that will be useful for screening new treatments, understanding podocyte pathogenesis, and offering possibilities for regenerative medicine.