Successful in vitro disease‐recapitulation using patient‐specific induced pluripotent stem cells (iPSCs) requires two fundamental technical issues: appropriate control cells and robust differentiation protocols. To investigate fibrodysplasia ossificans progressiva (FOP), a rare genetic disease leading to extraskeletal bone formation through endochondral ossification, gene‐corrected (rescued) iPSC clones (resFOP‐iPSC) were generated from patient‐derived iPSC (FOP‐iPSC) as genetically matched controls, and the stepwise induction method of mesenchymal stromal cells (iMSCs) through neural crest cell (NCC) lineage was used to recapitulate the disease phenotype. FOP‐iMSCs possessing enhanced chondrogenic ability were transcriptionally distinguishable from resFOP‐iMSCs and activated the SMAD1/5/8 and SMAD2/3 pathways at steady state. Using this method, we identified MMP1 and PAI1 as genes responsible for accelerating the chondrogenesis of FOP‐iMSCs. These data indicate that iMSCs through NCC lineage are useful for investigating the molecular mechanism of FOP and corresponding drug discovery. Stem Cells  2015;33:1730–1742