The de novo derivation of lung progenitors from pluripotent stem cells provides the opportunity to model early lung development in vitro and allows easy access to cells for tissue engineering or basic cell biology studies. This detailed protocol allows the generation of lung and thyroid progenitors from mouse embryonic stem cell (ESC) or induced pluripotent stem cell (iPSC) lines. When used together with a published Nkx2.1-GFP knock-in ESC line, the protocol allows tracking and purification of lung and thyroid progenitors by sorting on the GFP reporter based on the induction of the earliest known marker of lung and thyroid cell fate, Nkx2.1. After sorting, a pure population of Nkx2.1+ cells can then be replated for further expansion, differentiation, and maturation in culture in serum-free conditions.