Impaired lung function is often caused by cigarette smoking, making it challenging to disentangle its role in lung cancer susceptibility. Investigation of the shared genetic basis of these phenotypes in the UK Biobank and International Lung Cancer Consortium (29,266 cases, 56,450 controls) shows that lung cancer is genetically correlated with reduced forced expiratory volume in one second (FEV1: rg = 0.098, p = 2.3 × 10−8) and the ratio of FEV1 to forced vital capacity (FEV1/FVC: rg = 0.137, p = 2.0 × 10−12). Mendelian randomization analyses demonstrate that reduced FEV1 increases squamous cell carcinoma risk (odds ratio (OR) = 1.51, 95% confidence intervals: 1.21–1.88), while reduced FEV1/FVC increases the risk of adenocarcinoma (OR = 1.17, 1.01–1.35) and lung cancer in never smokers (OR = 1.56, 1.05–2.30). These findings support a causal role of pulmonary impairment in lung cancer etiology. Integrative analyses reveal that pulmonary function instruments, including 73 novel variants, influence lung tissue gene expression and implicate immune-related pathways in mediating the observed effects on lung carcinogenesis.