Expression of NKX2-1 is required to specify definitive endoderm to respiratory endoderm. However, the transcriptional regulation of NKX2-1 is not fully understood. Here we demonstrate that aside from specifying undifferentiated human embryonic stem cell (hESC) to definitive endoderm, high concentrations of Activin-A are also necessary and sufficient to induce hESC-derived definitive endodermal progeny to a FOXA2/NKX2-1/GATA6/PAX9 positive respiratory epithelial fate. Activin-A directly mediates the induction of NKX2-1 by interacting with ALK4, leading to phosphorylation of SMAD2, which binds directly to the NKX2-1 promoter and activates its expression. Activin-A can be replaced by GDF11 but not transforming growth factor β1. Addition of Wnt3a, SHH, FGF2, or BMP4 failed to induce NKX2-1. These results suggest that direct binding of Activin-A-responsive SMAD2 to the NKX2-1 promoter plays essential role during respiratory endoderm specification.