Abstract Tumor nests in lung squamous cell carcinoma (LUSC) have a hierarchical structure resembling squamous epithelium. The nests consist of basal-like cells on the periphery and layers of keratinocyte-like cells that differentiate towards the center of the nest, forming keratin pearls. Reproducing this spatial heterogeneity in in vitro models would be useful for understanding the biology of LUSC. Here, we established a three-dimensional (3D) culture model with a squamous epithelial structure using LUSC cell lines PLR327F-LD41 and MCC001F, established in-house. When PLR327F-LD41 cells were cultured in a mixture of Matrigel and collagen I, they generated 3D colonies (designated cancer organoids, or COs) with involucrin (IVL)-positive keratinizing cells in the center (IVLinner COs). COs with uniform size were generated by seeding PLR327F-LD41 cells in a form of small cell aggregates. Since Notch signaling induces the differentiation of squamous epithelium, we confirmed the effect of γ-secretase inhibitor in inhibiting Notch signaling in IVLinner COs. Surprisingly, γ-secretase inhibitor did not block induction of IVL-positive cells; however, cells residing between the CK5-positive basal-like layer and IVL-positive layer decreased significantly. Thus, our 3D culture model with uniform size and structure promises to be a useful tool for elucidating the biology of LUSC and for screening drug-candidates.