Diseases affecting the central nervous system (CNS) pose a formidable obstacle to the delivery of effective therapeutics. A tight-knit collection of cells and macromolecules known as the blood-brain-barrier (BBB) prevents most substances from entering the brain. One intriguing approach to overcoming this obstacle involves transplanting neural stem cells (NSCs), the precursor cells to neurons and glia in the brain, as vehicles for the delivery of therapeutic proteins in their native environment. Notably, this strategy has already been successfully applied to several lysosomal storage diseases caused by genetic deficiencies in one of the many lysosomal hydrolases expressed throughout the body. A major drawback to this approach is that foreign NSCs, e.g. immortalized cell lines and primary fetal NSCs can be tumorigenic and immunogenic. Recently developed induced pluripotent stem cell (iPSC) technologies, combined with pluripotent stem cell differentiation techniques, have the potential to overcome these obstacles. This approach was evaluated using a comprehensive strategy targeting a prototypical lysosomal storage disease, Sly disease (MPS VII). MPS VII patient fibroblasts were transduced with retroviral vectors expressing the transcription factors Oct4, Sox2, Klf4, and c-Myc. Patient fibroblasts were reprogrammed into embryonic stem cell-like iPSCs that demonstrated hallmarks of pluripotency. Patient iPSCs, alongside iPSCs derived from an unaffected individual, were subjected to a stepwise differentiation protocol, yielding a relatively homogenous population of NSCs. Following in vitro characterization, patient iPSCs were genetically corrected using a DNA transposon-based vector. Transplantation of NSCs into neonatal MPS VII mice revealed that these cells could migrate long distances and survive for several months. However, corrected grafts expressing physiological levels of the missing enzyme, β-glucuronidase, were too sparse to significantly ameliorate pathology. In contrast, the same cells transplanted into the post-symptomatic adult MPS VII striatum were restricted to the injection site. Corrected, but not uncorrected patient iPSC-NSCs, were able to restore pathologically activated microglia to a normal quiescent state in a zone surrounding the graft. Together, these results provide evidence that ex vivo NSC gene therapy may be a viable option for many lysosomal storage diseases using easily attainable, non-neural patient tissue.