Chronic obstructive pulmonary disease (COPD) is a major public health disease (i.e., 3rd cause of death worldwide), characterized by chronic inflammation and remodelling. The lack of physiological relevance of traditional 2D cell culture models, as well as the limited predictibility of tests performed in animal models, strongly limit drug discovery. In the present project, we aim to develop a 3D “bronchioid” modeling small airway, which should overcome the limitations of current models of distal bronchi. To this aim, we develop a so-called bronchioid model, using an innovative tubuloid cell-based assay and human bronchial adult stem cells derived from clinical samples. Working with the unique cellular capsule technology, we produce a tubular scaffold made of alginate gel that drives the spontaneous self-organisation of bronchial epithelial cells. Our results show that fine-tuning the level of contraction is required to obtain a model of distal bronchiole, with physiologically relevant shape and size. Imaging and gene expression analysis of organoids made of primary bronchial epithelial cells demonstrate the tubular organization, the formation of epithelial junctions, proper differentiation into ciliated and goblet cells and ciliary beating. The bronchioid is perfusable with air, and we are able to create an air–liquid interface. Including a mesenchymal compartment by indirect coculture with patient-derived airway smooth muscle cells, or by directly integrating them in the alginate wall, improved the stability and robustness of the system. We provide a proof of concept of a perfusable bronchioid, with proper mucociliary and contractile functions. Key advantages of our approach, such as the air–liquid interface, the lumen accessibility, the opportunity to perform coculture with disease-relevant cell types, and possible assessment of clinically pertinent endpoints, will make our pulmonary organoid a powerful tool for pre-clinical studies.