Human induced pluripotent stem cell (iPSC) derived alveolar organoids have emerged as a system to model the alveolar epithelium in homeostasis and disease. However, alveolar organoids are typically grown in Matrigel, a mouse-sarcoma derived basement membrane matrix that offers poor control over matrix properties, prompting the development of synthetic hydrogels as a Matrigel alternative. Here, we develop a two-step culture method that involves pre-aggregation of organoids in hydrogel-based microwells followed by embedding in a synthetic hydrogel that supports alveolar organoid growth, while also offering considerable control over organoid and hydrogel properties. We find that the aggregated organoids secrete their own nascent extracellular matrix (ECM) both in the microwells and upon embedding in the synthetic hydrogels. Thus, the synthetic gels described here allow us to de-couple exogenous and nascent ECM in order to interrogate the role of ECM in organoid formation.