Genomic aberrations are a critical impediment for the safe medical use of iPSCs and their origin and developmental mechanisms remain unknown. Here we find through WGS analysis of human and mouse iPSC lines that genomic mutations are de novo events and that, in addition to unmodified cytosine base prone to deamination, the DNA methylation sequence CpG represents a significant mutation-prone site. CGI and TSS regions show increased mutations in iPSCs and elevated mutations are observed in retrotransposons, especially in the AluY subfamily. Furthermore, increased cytosine to thymine mutations are observed in differentially methylated regions. These results indicate that in addition to deamination of cytosine, demethylation of methylated cytosine, which plays a central role in genome reprogramming, may act mutagenically during iPSC generation.