ABSTRACT Bud tip progenitors (BTPs) in the developing lung give rise to all epithelial cell types found in the airways and alveoli. This work aimed to develop an iPSC organoid model enriched with NKX2-1+ BTP-like cells. Building on previous studies, we optimized a directed differentiation paradigm to generate spheroids with more robust NKX2-1 expression. Spheroids were expanded into organoids that possessed NKX2-1+/CPM+ BTP-like cells, which increased in number over time. Single cell RNA-sequencing analysis revealed a high degree of transcriptional similarity between induced BTPs (iBTPs) and in vivo BTPs. Using FACS, iBTPs were purified and expanded as induced bud tip progenitor organoids (iBTOs), which maintained an enriched population of bud tip progenitors. When iBTOs were directed to differentiate into airway or alveolar cell types using well-established methods, they gave rise to organoids composed of organized airway or alveolar epithelium, respectively. Collectively, iBTOs are transcriptionally and functionally similar to in vivo BTPs, providing an important model for studying human lung development and differentiation.