5-fluorouracil (5-FU) has been widely used for the treatment of tumors. Regardless of its widespread use as an anti-cancer drug, 5-FU therapy can cause several side effects, including developmental toxicity and neurotoxicity. However, the potential action of 5-FU at the early fetal stage has not yet been completely elucidated. In the present study, we investigated the effect of 5-FU exposure on neural induction, using human induced pluripotent stem cells (iPSCs) as a model of human fetal stage. 5-FU exposure reduced the expression of several neural differentiation marker genes, such as OTX2, in iPSCs. Since the neural differentiation process requires ATP as a source of energy, we next examined intracellular ATP content using iPSCs. We found that 5-FU decreased intracellular ATP levels in iPSCs. We further focused on the effects of 5-FU on mitochondrial dynamics, which plays a role of ATP production. We found that 5-FU induced mitochondrial fragmentation and reduced the level of mitochondrial fusion proteins, mitofusin 1 and 2 (Mfn1/2). Double knockdown of Mfn1/2 genes in iPSCs downregulated the gene expression of OTX2, suggesting that Mfn mediates neural differentiation in iPSCs. Taken together, these results indicate that 5-FU has a neurotoxicity via Mfn-mediated mitochondria dynamics in iPSCs. Thus, mitochondrial dysfunction in iPSCs could be used as a possible marker for cytotoxic effects of drugs.