The acquisition of innate immune response is requisite to having bona fide differentiation of airway epithelium. Procedures developed to differentiate lung airway from human pluripotent stem cells (hPSCs) have demonstrated anecdotal evidence for innate immune response, but an in-depth exploration of response levels is lacking. Herein, using an established method of airway epithelial generation from hPSCs, we show that hPSC-derived epithelial cells are able to up-regulate expression of TNFα , IL8 and IL1β in response to challenge with bacterial endotoxin LPS, but lack response from genes associated with innate immune response in other cell types. Further, stimulation of cells with TNF-α resulted in auto-induction of TNFα transcript, as well as cytokine responses of IL8 and IL1β. The demonstration of innate immune induction in hPSC-derived airway epithelia gives further strength to the functionality of in vitro protocols aimed at generating differentiated airway cells that can potentially be used in a translational setting. Finally, we propose that innate immune challenge of airway epithelium from human pluripotent stem cell sources be used as a robust validation of functional in vitro differentiation.