Lung progenitor (LP) cells identified by the expression of transcription factor NK2 homeobox 1 (NKX2.1) are essential for the development of all lung epithelial cell types and hold tremendous potential for pulmonary research and translational regenerative medicine applications. Here, we present engineered hydrogels as a promising alternative to the naturally derived materials that are often used to differentiate human-induced pluripotent stem cells (iPSCs) into LP cells. Poly(ethylene glycol) norbornene (PEGNB) hydrogels with defined composition were used to systematically investigate the role of microenvironmental stiffness, cell origin, and splitting during the differentiation process. Results demonstrated that each factor impacted LP differentiation efficiency and that the soft hydrogels replicating healthy lung stiffness [elastic modulus (