Lineage-specific differentiation of human induced pluripotent stem cells (hiPSCs) relies on complex interactions between biochemical and physical cues. Here we investigated the ability of hiPSCs to undergo lineage commitment in response to inductive signals and assessed how this competence is modulated by substrate stiffness. We showed that Activin A-induced hiPSC differentiation into mesendoderm and its derivative, definitive endoderm, is enhanced on gel-based substrates softer than glass. This correlated with changes in tight junction formation and extensive cytoskeletal remodeling. Further, live imaging and biophysical studies suggested changes in cell motility and interfacial contacts underlie hiPSC layer reshaping on soft substrates. Finally, we repurposed an ultra-soft silicone gel, which may provide a suitable substrate for culturing hiPSCs at physiological stiffnesses. Our results provide mechanistic insight into how epithelial mechanics dictate the hiPSC response to chemical signals and provide a tool for their efficient differentiation in emerging stem cell therapies.