Fanconi Anemia (FA) is a recessive disorder characterized by genomicinstability, congenital abnormalities, cancer predisposition and bone marrowfailure. However, the pathogenesis of FA is not fully understood partly due to thelimitations of current models. Here, we derive integration-free inducedpluripotent stem cells (iPSCs) from an FA patient without geneticcomplementation and report for the first time in situ gene correction inFA-iPSCs as well as the generation of isogenic FANCA deficient humanembryonic stem cell (ESC) lines. FA cellular phenotypes are recapitulated iniPSCs/ESCs and their stem/progenitor cell derivatives. We also validate theuse of our model as a drug-screening platform by identifying severalcompounds that improve hematopoietic differentiation of FA-iPSCs. Importantly,these compounds also rescue the hematopoietic phenotype of FA-patient bonemarrow cells. Together with isogenic pathogenic mutation-free controls, ourmodel facilitates the discovery of novel disease features by using cellular andgenomic tools.