The inherited neurodegenerative disease Friedreich's ataxia (FRDA) is caused by GAATTC triplet repeat hyperexpansions within the first intron of the FXN gene, encoding the mitochondrial protein frataxin. Long GAATTC repeats cause heterochromatin-mediated gene silencing and loss of frataxin in affected individuals. We report the derivation of induced pluripotent stem cells (iPSCs) from FRDA patient fibroblasts by transcription factor reprogramming. FXN gene repression is maintained in the iPSCs, as are the global gene expression signatures reflecting the human disease. GAATTC repeats uniquely in FXN in the iPSCs exhibit repeat instability similar to patient families, where they expand and/or contract with discrete changes in length between generations. The mismatch repair enzyme MSH2, implicated in repeat instability in other triplet repeat diseases, is highly expressed in pluripotent cells and occupies FXN intron 1, and shRNA silencing of MSH2 impedes repeat expansion, providing a possible molecular explanation for repeat expansion in FRDA. © 2010 Elsevier Inc.