Corneal epithelium maintains visual acuity and is regenerated by the proliferation and differentiation of limbal progenitor cells. Transplantation of human limbal progenitor cells could restore the integrity and functionality of the corneal surface in patients with limbal stem cell deficiency. However, multiple protocols are employed to differentiate human induced pluripotent stem (iPS) cells into corneal epithelium or limbal progenitor cells. The aim of this study was to optimize a protocol that uses bone morphogenetic protein 4 (BMP4) and limbal cell-specific medium. Human dermal fibroblast-derived iPS cells were differentiated into limbal progenitor cells using limbal cell-specific (PI) medium and varying doses (1, 10, and 50 ng/mL) and durations (1, 3, and 10 days) of BMP4 treatment. Differentiated human iPS cells were analyzed by real-time polymerase chain reaction (RT-PCR), Western blotting, and immunocytochemical studies at 2 or 4 weeks after BMP4 treatment. Culturing human dermal fibroblast-derived iPS cells in limbal cell-specific medium and BMP4 gave rise to limbal progenitor and corneal epithelial-like cells. The optimal protocol of 10 ng/mL and three days of BMP4 treatment elicited significantly higher limbal progenitor marker (ABCG2, ∆Np63α) expression and less corneal epithelial cell marker (CK3, CK12) expression than the other combinations of BMP4 dose and duration. In conclusion, this study identified a successful reprogramming strategy to induce limbal progenitor cells from human iPS cells using limbal cell-specific medium and BMP4. Additionally, our experiments indicate that the optimal BMP4 dose and duration favor limbal progenitor cell differentiation over corneal epithelial cells and maintain the phenotype of limbal stem cells. These findings contribute to the development of therapies for limbal stem cell deficiency disorders.