Although human induced pluripotent stem cells (hiPSCs) have enormous potential in regenerative medicine, their epigenetic variability suggests that some lines may not be suitable for human therapy. There are currently few benchmarks for assessing quality. Here we show that X-inactivation markers can be used to separate hiPSC lines into distinct epigenetic classes and that the classes are phenotypically distinct. Loss of XIST expression is strongly correlated with upregulation of X-linked oncogenes, accelerated growth rate in vitro, and poorer differentiation in vivo. Whereas differences in X-inactivation potential result in epigenetic variability of female hiPSC lines, male hiPSC lines generally resemble each other and do not overexpress the oncogenes. Neither physiological oxygen levels nor HDAC inhibitors offer advantages to culturing female hiPSC lines. We conclude that female hiPSCs may be epigenetically less stable in culture and caution that loss of XIST may result in qualitatively less desirable stem cell lines.