The lung epithelium is derived from the endodermal germ layer, which undergoes a complex series of endoderm–mesoderm-mediated signaling events to generate the final arborized network of conducting airways (bronchi, bronchioles) and gas-exchanging units (alveoli). These stages include endoderm induction, anterior–posterior and dorsal–ventral patterning, lung specification, lung budding, branching morphogenesis, and, finally, maturation. Here we describe a protocol that recapitulates several of these milestones in order to differentiate human pluripotent stem cells (hPSCs) into ventral–anterior foregut spheroids and further into two distinct types of organoids: human lung organoids and bud tip progenitor organoids. The resulting human lung organoids possess cell types and structures that resemble the bronchi/bronchioles of the developing human airway surrounded by lung mesenchyme and cells expressing alveolar-cell markers. The bud tip progenitor organoids possess a population of highly proliferative multipotent cells with in vitro multilineage differentiation potential and in vivo engraftment potential. Human lung organoids can be generated from hPSCs in 50–85 d, and bud tip progenitor organoids can be generated in 22 d. The two hPSC-derived models presented here have been benchmarked with human fetal tissue and found to be representative of human fetal-like tissue. The bud tip progenitor organoids are thus ideal for exploring epithelial fate decisions, while the human lung organoids can be used to model epithelial–mesenchymal cross-talk during human lung development. In addition to their applications in developmental biology, human lung organoids and bud tip progenitor organoids may be implemented in regenerative medicine, tissue engineering, and pharmaceutical safety and efficacy testing.