No cure has been discovered for age-related macular degeneration (AMD), the leading cause of vision loss in people over the age of 55. AMD is complex multifactorial disease with an unknown etiology, although it is largely thought to occur due to death or dysfunction of the retinal pigment epithelium (RPE), a monolayer of cells that underlies the retina and provides critical support for photoreceptors. RPE cell replacement strategies may hold great promise for providing therapeutic relief for a large subset of AMD patients, and RPE cells that strongly resemble primary human cells (hRPE) have been generated in multiple independent labs, including our own. In addition, the uses for iPS-RPE are not limited to cell-based therapies, but also have been used to model RPE diseases. These types of studies may not only elucidate the molecular bases of the diseases, but also serve as invaluable tools for developing and testing novel drugs. We present here an optimized protocol for directed differentiation of RPE from stem cells. Adding nicotinamide and either Activin A or IDE-1, a small molecule that mimics its effects, at specific time points, greatly enhances the yield of RPE cells. Using this technique we can derive large numbers of low passage RPE in as early as three months.