Airway epithelial cells derived from induced pluripotent stem (iPS) cells are expected to be a useful source for the regeneration of airway epithelium. Our preliminary study of embryoid body (EB) formation and the air-liquid interface (ALI) method suggested that mouse iPS cells can differentiate into airway epithelial cells. However, whether the cells generated from mouse iPS cells had the character and phenotype of native airway epithelial cells remained uninvestigated. In this study, we generated airway epithelial cells from EBs by culturing them under serum-free conditions supplemented with Activin and bFGF and by the ALI method and characterized the iPS cell-derived airway epithelial cells in terms of their gene expression, immunoreactivity, morphology, and function. Analysis by quantitative real-time reverse transcription-polymerase chain reaction(RT-PCR) revealed that the expression of the undifferentiated cell marker Nanog decreased time-dependently after the induction of differentiation, whereas definitive endoderm markers Foxa2 and Cxcr4 were transiently up-regulated. Thereafter, the expression of airway epithelium markers such as Tubb4a, Muc5ac, and Krt5 was detected by RT-PCR and immunostaining. The formation of tight junctions was also confirmed by immunostaining and permeability assay. Analysis by hematoxylin and eosin staining and scanning electron microscopy indicated that the cells generated from mouse iPS cells formed airway-epithelium-like tissue and had cilia, the movement of which was visualized and observed to be synchronized. These results demonstrate that the airway epithelial cells generated by our method have native characteristics and open new perspectives for the regeneration of injured airway epithelium.