The daunting task of lung epithelium development is to transform a cluster of foregut progenitors into a three‐dimensional (3D) tubular network with distinct cell types distributed at their appropriate locations. A complete understanding of lung development needs to address not only how, but also where, different cell types form. We propose that the lung epithelium forms through regulated deployment of three developmental programs: branching morphogenesis to expand progenitors and build a tree‐like tubular network, airway differentiation to specify cells for the proximal conducting airways, and alveolar differentiation to specify cells for the peripheral gas exchange region. Each developmental program has its unique morphological features and molecular control mechanisms; their spatiotemporal coordination can be accounted for in a balanced progenitor model where progenitors balance between alternative developmental programs in response to spatiotemporal cues. This model integrates progenitor morphogenesis and differentiation, and provides new insights to lung immaturity in preterm birth and lung evolution. Advanced gene targeting and 3D imaging tools are needed to achieve a comprehensive understanding of lung epithelial progenitors on molecular, cellular, and morphological levels.This article is categorized under: Gene Expression and Transcriptional Hierarchies > Cellular Differentiation Signaling Pathways > Cell Fate Signaling Vertebrate Organogenesis > From a Tubular Primordium: Branched