Human induced pluripotent stem cells (hiPSCs) are creating great expectations for regenerative medicine. However, safety strategies must be put in place to guard against teratoma formation after transplantation of hiPSC-derived cells into patients. Recent studies indicate that epigenetic regulators act at the initial step of tumorigenesis. Using gain-of-function and loss-of-function approaches, we show here that the expression and function of lysine-specific demethylase 1 (LSD1) are tightly regulated in hiPSCs, and their deregulation underlies the development of teratomas. Consistent with these results, we demonstrate that an LSD1 inhibitor, S2157, prevented teratoma formation from hiPSCs transplanted into immunodeficient mice. This novel action of LSD1 and the effects of its inhibition potentially allow for the development of new clinical applications and therapeutic strategies using hiPSCs.