N6-methyladenosine (m6A) modification and m6A-related RNA-binding proteins (RBPs) play vital roles in various aspects of circRNA metabolism. Hsa_circRNA_103820 is implicated in the pathogenesis of multiple cancers, including lung cancer (LC). Moreover, bioinformatics analysis has suggested that hsa_circRNA_103820 possesses potential peptide-coding ability. Thus, we aimed to investigate the function and peptide-coding potential of hsa_circRNA_103820 in this study. Cell viability, apoptosis rate, and migratory and invasive abilities were assessed using CCK-8, flow cytometry, and transwell assays, respectively. Hsa_circRNA_103820 level was measured using RT-qPCR assay, and the interaction between hsa_circRNA_103820 and IGF2BP3 was examined through RIP and RT-qPCR assays. The coding ability of hsa_circRNA_103820 and protein levels were determined through western blot assay. The results showed that hsa_circRNA_103820 reduced cell viability, attenuated cell migratory and invasive abilities, and promoted cell apoptosis in LC. IGF2BP3 negatively regulated hsa_circRNA_103820 expression and interacted with it. Hsa_circRNA_103820 knockdown alleviated si-IGF2BP3-mediated anti-viability, anti-migration, anti-invasion, and pro-apoptosis effects in LC cells. Moreover, a 188-amino acid (aa) peptide encoded by hsa_circRNA_103820 decreased cell viability, facilitated cell apoptosis, and inhibited cell migration and invasion in LC. Collectively, hsa_circRNA_103820, regulated by IGF2BP3, encodes a 188-aa peptide and inhibits the malignant progression of LC cells by inhibiting the AKT pathway.