This perspective reviews the effects of different tissue engineering techniques, for induced differentiation of human embryonic stem cells into pulmonary lineage specific cells, and validating cell based regenerative therapy to ameliorate pulmonary degeneration. The etiology of degeneration differs from disease to disease. Likewise, strategies to regenerate lost tissues in its heterogeneity, should also cater to the regeneration process. To customize the same, researchers ought to device strategies to repair, replace or regenerate, in the spatio- temporal format, healthy tissues in their heterogeneous multi-functional existence, such that when transplanted in vitro, they may find their niche and integrate seamlessly into the tissue system and manifest full-fledged functional competence in order to reverse the erstwhile effects of degeneration. Cell based lung repair or regeneration is unquestionably the most promising agenda of regenerative medicine. In one of our studies, human embryonic stem cell (hESC) line H7 was successfully differentiated into three non-ciliated alveolar epithelial cells. In another study, BJNhem19 and BJNhem20 stem cell lines were used to induce similar guided endodermal differentiation into pulmonary lineage cells. Both studies were done using similar protocols, where the hESCs were first plated on gamma irradiated mouse embryonic fibroblast (MEF) feeder cells and undifferentiated hESCs were taken through embroid body formation. They were then subjected to induction into lung specific cells, by defined growth factors in Small Airways Growth Medium (SAGM) and Bronchiolar Endothelial Growth Media (BEGM). The H7 cells were found to express, both intracellularly and on their surfaces, characteristic marker proteins. However, the BJNhem19 and BJNhem20 cells showed poor differential potential, and could not be successfully differentiated into lung- specific cells. This difference in differentiation potential may be due to several intrinsic limitations, like genetic heterogeneity, anomalous morphogen receptivity or dormant/ unresponsive cytoplasmic determinants. These observations indicate that the choice of cells may play an important factor in tissue engineering. This review addresses the different culture methods and conditions needed for guided differentiation of stem cells. This perspective also discusses culture conditions of mesenchymal stem cells from different origins and dendritic stem cells from bone marrow.