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The pathogenic mechanisms of frontotemporal dementia (FTD) remain poorly understood. Here we generated multiple induced pluripotent stem cell lines from a control subject, a patient with sporadic FTD, and an FTD patient with a novel heterozygous GRN mutation (progranulin [PGRN] S116X). In neurons and microglia differentiated from PGRN S116X induced pluripotent stem cells, the levels of intracellular and secreted PGRN were reduced, establishing patient-specific cellular models of PGRN haploinsufficiency. Through a systematic screen of inducers of cellular stress, we found that PGRN S116X neurons, but not sporadic FTD neurons, exhibited increased sensitivity to staurosporine and other kinase inhibitors. Moreover, the serine/threonine kinase S6K2, a component of the phosphatidylinositol 3-kinase and mitogen-activated protein kinase pathways, was specifically downregulated in PGRN S116X neurons. Both increased sensitivity to kinase inhibitors and reduced S6K2 were rescued by PGRN expression. Our findings identify cell-autonomous, reversible defects in patient neurons with PGRN deficiency, and provide a compelling model for studying PGRN-dependent pathogenic mechanisms and testing potential therapies.