Icariin (ICA) is one of the main bioactive monomer belonging to the flavonoid glycosides that has been widely studied in multiple diseases, including lung cancer. Although ICA has shown anticancer effects, its specific molecular mechanism of action remains to be elucidated. In the present study, the expression of microRNA (miR)-205-5p and Phosphatase and tensin homolog deleted on chromosome ten (PTEN) in human lung cancer and bronchial cells were analyzed. Cell viability, colony formation, migration, invasion, apoptosis and cell cycle distribution were investigated in vitro. In addition, the function of ICA on tumor growth was determined using a xenotransplantation model. The results showed that ICA decreased the viability of lung cancer cells. In addition, miR-205-5p was upregulated in lung cancer tissues but downregulated following ICA treatment, while PTEN showed a significantly lower expression in lung cancer cells. miR-205-5p could increase cancer cell proliferation, migration, invasion and cell cycle progression while suppressing cell apoptosis. Importantly, rescue experiment results showed that ICA could target the miR-205-5p/PTEN axis to affect the PI3K/Akt signaling, thereby suppressing the malignant cell phenotype of lung cancer. Finally, animal experiments confirmed that ICA could inhibit lung cancer growth in vivo. Taken together, our findings suggest that miR-205-5p is a key gene targeted by ICA to inhibit lung cancer progression.