Stem cells are proposed as a new frontier in understanding the cellular bases of brain diseases and as a new platforms for drug discovery. Embryonic stem cells with genetic mutations have been produced and multiple papers are published on iPS cells derived from patients with known mutations. We have established a novel patient-derived stem cell model based on neurosphere-derived cells from the olfactory mucosa. Characteristics of these cells suggest they are derived embryologically from neural crest. Many questions are now arising about the practicalities of disease modelling and drug discovery using stem cells. How much variability is there between clones and between individuals that may obscure disease differences? Is it possible to use stem cell cultures to model diseases with complex genetics? What aspects of a brain disease are modelled by stem cells in vitro? How can we use stem cells in drug discovery? We are exploring these issues with our “NeuroBank” of more than 200 olfactory stem cells lines and 18 iPS cell lines from patients and healthy controls. Using olfactory stem cells we are investigating nervous system diseases of complex genetics, Parkinson’s disease and schizophrenia, and single gene disorders, Hereditary Spastic Paraplegia and Ataxia Telangiectasia. We are using iPS cells to investigate schizophrenia. Patient-derived olfactory stem cells show alterations in gene expression and cell functions that are specific to and relevant for each disease. Their ease of generation and propagation make them scalable for high throughput screening, which we are using to identify drug candidates from NatureBank, our library of 300,000 natural products isolated from Queensland’s biota. We have identified criteria for selection of fibroblast-derived iPS cells that reduces inter-clonal and inter-individual variability and demonstrated disease-associated alterations in gene expression and DNA methylation that are shared with olfactory stem cells from the same patients and controls.