Astrocytes abound in the human central nervous system (CNS) and play a multitude of indispensable roles in neuronal homeostasis and regulation of synaptic plasticity. While traditionally considered to be merely ancillary supportive cells, their complex yet fundamental relevance to brain physiology and pathology have only become apparent in recent times. Beyond their myriad canonical functions, previously unrecognised region-specific functional heterogeneity of astrocytes is emerging as an important attribute and challenges the traditional perspective of CNS-wide astrocyte homogeneity. Animal models have undeniably provided crucial insights into astrocyte biology, yet interspecies differences may limit the translational yield of such studies. Indeed, experimental systems aiming to understand the function of human astrocytes in health and disease have been hampered by accessibility to enriched cultures. Human induced pluripotent stem cells (hiPSCs) now offer an unparalleled model system to interrogate the role of astrocytes in neurodegenerative disorders. By virtue of their ability to convey mutations at pathophysiological levels in a human system, hiPSCs may serve as an ideal pre-clinical platform for both resolution of pathogenic mechanisms and drug discovery. Here, we review astrocyte specification from hiPSCs and discuss their role in modelling human neurological diseases.