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Lung cancer is one of the most lethal malignancies worldwide. Peroxisome proliferator-activated receptor gamma (PPARγ, NR1C3) is a ligand-activated transcriptional factor that governs the expression of genes involved in glucolipid metabolism, energy homeostasis, cell differentiation, and inflammation. Multiple studies have demonstrated that PPARγ activation exerts anti-tumor effects in lung cancer through regulation of lipid metabolism, induction of apoptosis, and cell cycle arrest, as well as inhibition of invasion and migration. Interestingly, PPARγ activation may have pro-tumor effects on cells of the tumor microenvironment, especially myeloid cells. Recent clinical data has substantiated the potential of PPARγ agonists as therapeutic agents for lung cancer. Additionally, PPARγ agonists also show synergistic effects with traditional chemotherapy and radiotherapy. However, the clinical application of PPARγ agonists remains limited due to the presence of adverse side effects. Thus, further research and clinical trials are necessary to comprehensively explore the actions of PPARγ in both tumor and stromal cells and to evaluate the in vivo toxicity. This review aims to consolidate the molecular mechanism of PPARγ modulators and to discuss their clinical prospects and challenges in tackling lung cancer.