Amyotrophic lateral sclerosis (ALS) is a neurodegenerative disease caused by the selective loss of both spinal and upper motor neurons. One strategy in treating ALS is to use stem cells to replace lost spinal motor neurons. However, transplanted stem cell-derived motor neurons may not survive when exposed to the harsh microenvironment in the spinal cord of ALS. In particular, dysfunctional astrocytes and overactivated microglia in ALS may limit the survival of motor neurons generated from cell replacement therapy. On the other hand, stem cells may provide large quantities of motor neurons that can be used for studying glia-mediated toxic mechanisms and potential therapies in ALS. Here we will review methods and molecular factors for directed differentiation of stem cells into spinal motor neurons, the potential uses of these models for dissecting the mechanisms underlying glia-induced motor neuron degeneration and screening for new therapeutics aimed at protecting motor neurons in ALS, as well as discuss challenges facing the development of motor neuron replacement-based cell therapies for recovery in ALS.