Tissue engineering of Schwann cells (SCs) can serve a number of purposes, such as in vitro SC-related disease modeling, treatment of peripheral nerve diseases or peripheral nerve injury, and, potentially, treatment of CNS diseases. SCs can be generated from autologous stem cells in vitro by recapitulating the various stages of in vivo neural crest formation and SC differentiation. In this review, we survey the cellular and molecular mechanisms underlying these in vivo processes. We then focus on the current in vitro strategies for generating SCs from two sources of pluripotent stem cells, namely embryonic stem cells (ESCs) and induced pluripotent stem cells (iPSCs). Different methods for SC engineering from ESCs and iPSCs are reviewed and suggestions are proposed for optimizing the existing protocols. Potential safety issues regarding the clinical application of iPSC-derived SCs are discussed as well. Lastly, we will address future aspects of SC engineering.