Abstract: An in vitro microfluidic “organ-on-chip” device is described herein that mimics the structure and at least one function of specific areas of the epithelial system in vivo. In particular, a stem cell-based Lung-on-Chip is described. This in vitro microfluidic system can be used for modeling differentiation of cells on-chip into lung cells, e.g., a lung (Lung-On-Chip), bronchial (Airway-On-Chip; small-Airway-On-Chip), alveolar sac (Alveolar-On-Chip), etc., for use in modeling disease states of derived tissue, i.e. as healthy, pre-disease and diseased tissues. Additionally, stem cells under differentiation protocols for deriving (producing) differentiated lung cells off-chips may be seeded onto microfluidic devices at any desired point during the in vitro differentiation pathway for further differentiation on-chip or placed on-chip before, during or after terminal differentiation.