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This protocol demonstrates purification and directed differentiation of lung and thyroid progenitor cells from mouse embryonic stem cells (ESCs). Inhibition of TGFb and BMP signaling, followed by combinatorial stimulation of BMP and FGF signaling, can distinctly differentiate these cells from definitive endodermal precursors. When derived using Nkx2-1::GFP knockin reporter ESCs, these progenitor cells can be purified and expanded in culture. They feature a transcriptome that overlaps with developing lung epithelium. Upon induction, they can express a broad repertoire of markers indicative of lung and thyroid lineages and can recellularize a 3D lung tissue scaffold.