In cell-based regenerative medicine, induced pluripotent stem cells (iPSCs) generated from reprogrammed adult somatic cells have emerged as a useful cell source due to the lack of ethical concerns and the low risk of immune rejection. To address the risk of teratoma formation, which is a safety issue in iPSC-based cell therapy, it is essential to selectively remove undifferentiated iPSCs remaining in the iPSC-derived differentiated cell product prior to in vivo transplantation. In this study, we explored whether an ethanol extract of coptidis rhizoma (ECR) exhibited anti-teratoma activity and identified the active components involved in the selective elimination of undifferentiated iPSCs. Transcriptome analysis of iPSCs confirmed that cell death-related pathways were significantly altered by ECR treatment. Our results demonstrate that ECR effectively induced apoptotic cell death and DNA damage in iPSCs, and that reactive oxygen species generation, mitochondrial damage, caspase activation, and p53 activation were involved in ECR-mediated iPSC death. However, in iPSC-derived differentiated cells (iPSC-Diff), reduced cell viability and the DNA damage response were not observed after ECR treatment. We co-cultured iPSCs and iPSC-Diff and found that ECR treatment selectively removed iPSCs, whereas iPSC-Diff remained intact. Prior to in ovo implantation, ECR treatment of a mixed cell culture of iPSCs and iPSC-Diff significantly suppressed iPSC-derived teratoma formation. Among the main components of the ECR, berberine and coptisine showed selective cytotoxicity to iPSCs but not to iPSC-Diff. Together, these results indicate the usefulness of ECRs in preparing safe and effective iPSC-based therapeutic cell products with no risk of teratoma formation.