Neurodegenerative diseases are severely debilitating conditions characterized primarily by progressive neuronal loss and impairment of the nervous system. Alzheimer’s and Parkinson’s diseases are the most common neurodegenerative disorders, and their impact is increasing as average life expectancy increases worldwide. Although the underlying mechanisms of both progressive diseases have been extensively studied, we still lack a comprehensive understanding of the molecular basis of both diseases. Current therapeutic options do not slow the progression of the diseases and only provide symptom relief. Cell models that resemble the characteristics of the disease in question are important in drug discovery projects because they provide information about the therapeutic benefits of drugs under development. Here, we review current in vitro cell models used to study the molecular basis of Alzheimer’s and Parkinson’s disease focusing on their potential for discovering of disease-modifying therapeutics to combat neurodegenerative diseases. We discuss phenotypic screening as an important approach for identifying novel therapeutic molecules. Advances in the development of cell-based assays for drug discovery are discussed, ranging from simple monoculture cell models to high-throughput three-dimensional cell models. Finally, we critically present the limitations of cell models and the caveats encountered in drug discovery to find effective treatment for neurodegenerative diseases. Display omitted •Treatments that effectively slow the progression of neurodegeneration are lacking.•Cell-based models of neurodegeneration are pivotal in drug discovery projects.•Phenotypic screening is useful approach to screen for novel therapeutic molecules.•Functional assays of neuronal death can be used to screen therapeutic compounds.