Patient-specific induced pluripotent stem cells (iPSCs) represent a novel system for modeling human genetic disease and could provide a source of cells for large-scale drug-discovery screens. Here we demonstrate the feasibility of performing a primary screen in neural crest precursors derived from iPSCs that were generated from individuals with familial dysautonomia (FD), a rare, fatal genetic disorder affecting neural crest lineages. We tested 6,912 small-molecule compounds and characterized eight that rescued expression of IKBKAP, the gene responsible for FD. One of the hits, SKF-86466, was found to induce IKBKAP transcription through modulation of intracellular cAMP levels and PKA-dependent CREB phosphorylation. SKF-86466 also rescued IKAP protein expression and the disease-specific loss of autonomic neuronal marker expression. Our data implicate alpha-2 adrenergic receptor activity in regulating IKBKAP expression and demonstrate that small-molecule discovery using an iPSC-based disease model can identify candidate drugs for potential therapeutic intervention.