Epithelial organoid models serve as valuable tools to study the basic biology of an organ system and for disease modeling. When grown as organoids, epithelial progenitor cells can self-renew and generate differentiating progeny that exhibit cellular functions similar to those of their in vivo counterparts. Herein we describe a step-by-step protocol to isolate region-specific progenitors from human lung and generate 3D organoid cultures as an experimental and validation tool. We define proximal and distal regions of the lung with the goal of isolating region-specific progenitor cells. We utilized a combination of enzymatic and mechanical dissociation to isolate total cells from the lung and trachea. Specific progenitor cells were then fractionated from the proximal or distal origin cells using fluorescence associated cell sorting (FACS) based on cell type-specific surface markers, such as NGFR for sorting basal cells and HTII-280 for sorting alveolar type II cells. Isolated basal or alveolar type II progenitors were used to generate 3D organoid cultures. Both distal and proximal progenitors formed organoids with a colony forming efficiency of 9-13% in distal region and 7-10% in proximal region when plated 5000 cell/well on day 30. Distal organoids maintained HTII-280+ alveolar type II cells in culture whereas proximal organoids differentiated into ciliated and secretory cells by day 30. These 3D organoid cultures can be used as an experimental tool for studying the cell biology of lung epithelium and epithelial mesenchymal interactions, as well as for the development and validation of therapeutic strategies targeting epithelial dysfunction in a disease.