Surfactant protein B (SFTPB) deficiency is a fatal disease affecting newborn infants. Surfactant is produced by alveolar type II cells which can be differentiated in vitro from patient specific induced pluripotent stem cell (iPSC)-derived lung organoids. Here we show the differentiation of patient specific iPSCs derived from a patient with SFTPB deficiency into lung organoids with mesenchymal and epithelial cell populations from both the proximal and distal portions of the human lung. We alter the deficiency by infecting the SFTPB deficient iPSCs with a lentivirus carrying the wild type SFTPB gene. After differentiating the mutant and corrected cells into lung organoids, we show expression of SFTPB mRNA during endodermal and organoid differentiation but the protein product only after organoid differentiation. We also show the presence of normal lamellar bodies and the secretion of surfactant into the cell culture medium in the organoids of lentiviral infected cells. These findings suggest that a lethal lung disease can be targeted and corrected in a human lung organoid model in vitro.