Induced pluripotent stem cells (iPSCs) have become the most promising candidates for in vitro modeling of motor neuron (MN) diseases, such as amyotrophic lateral sclerosis (ALS), and possibly for future therapeutic implementation in regenerative medicine. We here present for the first time the differentiation of human cord-blood-derived iPSCs (hCBiPSCs) into MNs, the cell type primarily affected in ALS. In contrast to iPSCs generated from adult tissue, the hCBiPSCs used in this study hold the promise of lower genetic mutation burden or epigenetic alterations, which makes them ideal candidates for transplantation studies. Small-molecule-derived neural precursor cells (smNPCs) were generated from hCBiPSCs and used for the following differentiation studies to substantially shorten MN differentiation time. Consequently, as early as 18 days of in vitro differentiation, the MNs stained positive for neuronal- and for MN-specific markers accompanied by respective gene expression patterns. To demonstrate that the hCBiPSC-derived neural precursor cells (smNPCs) can be differentiated into functional MNs, the cells were characterized by calcium imaging and patch-clamp analysis. Calcium imaging detected the expression of functional voltage-dependent calcium and ligand-gated channels of several important neurotransmitters. Using whole-cell patch-clamp recordings, we observed functional neuronal properties like sodium-inward currents and action potentials (APs). Some cells showed spontaneous APs and synaptic activity that are signs of essential functional maturation. Having established a rapid and efficient method to generate functional MNs from hCBiPSCs, we demonstrate the differentiation potential of genetically unbiased hCBiPSCs as promising source for transplantation studies and also create a framework for future in-vitro disease modeling.