SARS-CoV-2, the virus responsible for COVID-19, causes widespread damage in the lungs in the setting of an overzealous immune response whose origin remains unclear. We present a scalable, propagable, personalized, cost-effective adult stem cell-derived human lung organoid model that is complete with both proximal and distal airway epithelia. Monolayers derived from adult lung organoids (ALOs), primary airway cells, or hiPSC-derived alveolar type-II (AT2) pneumocytes were infected with SARS-CoV-2 to create in vitro lung models of COVID-19. Infected ALO-monolayers best recapitulated the transcriptomic signatures in diverse cohorts of COVID-19 patient-derived respiratory samples. The airway (proximal) cells were critical for sustained viral infection whereas distal alveolar differentiation (AT2→AT1) was critical for mounting the overzealous host immune response in fatal disease; ALO monolayers with well-mixed proximodistal airway components recapitulated both. Findings validate a human lung model of COVID-19 which can be immediately utilized to investigate COVID-19 pathogenesis, and vet new therapies and vaccines.