Cell-based immunotherapy, recognized as living drugs, is revolutionizing clinical treatment to advanced cancer and shaping the landscape of biomedical research for complex diseases. The differentiation of human pluripotent stem cells (PSCs) emerges as a novel platform with the potential to generate an unlimited supply of therapeutic immune cells, especially when coupled with gene modification techniques. PSC-based immunotherapy is expected to meet the vast clinical demand for living drugs. Here, we examine recent preclinical and clinical advances in PSC-based immunotherapy, focusing on PSC gene modification strategies and differentiation methods for producing therapeutic immune cells. We also discuss opportunities in this field and challenges in cell quality and safety and stresses the need for further research and transparency to unlock the full potential of PSC immunotherapies.