A major function of the lung is as a mechanical pump to bring oxygen-rich air into the body, allow gas exchange to occur, and remove carbon dioxide-rich air. It is increasingly recognized that physical forces, such as tension, compression, or shear, as well as passive mechanical material properties such as substrate stiffness affect lung development and play a role in many lung diseases. If the foetal breathing movements leading to amniotic fluid inhalation, and therefore the exertion of physical forces on the developing lung, are perturbed this leads to pulmonary hypoplasia and can result in neonatal morbidity and mortality. Part of the mechanism for these effects is that the sheer stress exerted by the amniotic fluid plays a role in alveolar differentiation as the pressure allows alveolar type I cells to flatten. In humans, mechanical forces and material properties are clinically important both in development, evident in prematurely delivered infants as well as in diseases such as pulmonary fibrosis, where increase in tissue stiffness leads to lung dysfunction. However, not all mechanical cues affecting lung development and disease are known, nor their mechanism of action. There are different biological materials deposited along the proximal-distal axis in the lung, such as cartilage in the trachea and smooth muscle in the bronchi, versus elastic fibres in the alveoli. Considering this, as well as the clinical relevance of stiffness in lung diseases, I hypothesised that tissue stiffness can play a role in defining cellular fate. I measured the stiffness of human embryonic lung slices over developmental time using Atomic Force microscopy-based indentation measurements and found both temporal and spatial stiffness gradients. The spatial gradient revealed that the epithelial tips of the growing airway tubes are softer than the main body of the airway tubes. This contrasted with the closely aligned blood vessels, which did not show significant changes spatially in stiffness in the timeframe of the experiment. To test the hypothesis that stiffness affects lung cell fate decisions, I grew human embryonic lung organoids in 3D hydrogels of tuneable stiffness using stiffness values derived from the in vivo measurements. Organoids grown in soft (100 Pa) gels were spherical and hollow in morphology, similar to the Matrigel-grown controls. By contrast, organoids grown in stiff gels (4 kPa) were highly folded. Moreover, organoids grown in stiff gels lost nuclear localisation of their SOX9 protein and failed to undergo alveolar differentiation, suggesting a loss of progenitor cell identity. Inhibition of Rho-kinase (ROCK) reverted both the SOX9 and alveolar differentiation phenotypes in stiff gels, showing that contractility is important for the cells to sense and respond to the surrounding stiffness. Moreover, I observed that growth of organoids at high stiffness can lead to spatial constraint. Growing organoids in soft gels with either high or low density showed that high density mimics the effects of high stiffness gels, suggesting that spatial constraint downstream of stiffness is what causes the observed phenotypes. Taken together, these results show that there are mechanically distinctive features in the embryonic human lung and that the epithelial tip cells are capable of sensing and responding to them by changing their cell fate accordingly. These findings not only contribute to a better understanding of lung development but can also have potential clinical relevance in treating diseases such as pulmonary fibrosis.