IGFBP-3 has dual impact for the lung cancer development. The IGF axis has been implicated in the risk of various cancers. We previously reported a potential role of tissue-derived IGF in lung tumor formation and progression. However, the role of IGF-binding protein (IGFBP)-3, a major IGFBP, on the activity of tissue-driven IGF in lung cancer development is largely unknown. Here, we show that IGF-I, but not IGF-II, protein levels in non-small-cell lung cancer (NSCLC) were significantly higher than those in normal and hyperplastic bronchial epithelium. We found that IGF-I and IGFBP-3 levels in NSCLC tissue specimens were significantly correlated with phosphorylated IGF-IR (pIGF-IR) expression. We investigated the impact of IGFBP-3 expression on the activity of tissue-driven IGF-I in lung cancer development using mice carrying lung-specific human IGF-I transgene (Tg), a germline-null mutation of IGFBP-3, or both. Compared with wild-type (BP3+/+) mice, mice carrying heterozygous (BP3+/−) or homozygous (BP3−/−) deletion of IGFBP-3 alleles exhibited decreases in circulating IGFBP-3 and IGF-I. Unexpectedly, IGFTg mice with 50% of physiological IGFBP-3 (BP3+/−; IGFTg) showed higher levels of pIGF-IR/IR and a greater degree of spontaneous or tobacco carcinogen 4-(methylnitrosamino)-1-(3-pyridyl)-1-butanone-induced lung tumor development and progression than did the IGFTg mice with normal (BP3+/+; IGFTg) or homozygous deletion of IGFBP-3 (BP3−/−; IGFTg). These data show that IGF-I is overexpressed in NSCLC, leading to activation of IGF-IR, and that IGFBP-3, depending on its expression level, either inhibits or potentiates IGF-I actions in lung carcinogenesis.