Pulmonary organoids currently represent the most accurate in vitro model for mimicking the structure and function of the human lung, serving as a transformative tool in respiratory research and medical practice. However, their broad application is hindered by several challenges, including limited maturity, lack of standardization, unclear regulatory pathways, high costs, and difficulties in scaling production. This review systematically outlines the current research status and development trends of pulmonary organoids, with emphasis on their value as in vitro models and research platforms for elucidating the biological features and pathophysiological mechanisms of lung diseases. Special attention is given to their emerging role in traditional Chinese medicine (TCM), such as evaluating pharmacological effects of herbal compounds, screening active ingredients, and exploring mechanisms underlying TCM syndrome differentiation and treatment. The aim of this review is to provide comprehensive evidence to support precision diagnosis, drug development, and therapeutic strategies for respiratory diseases.