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We aimed to establish a representative exposure response function between PM 2.5 and lung cancer to evaluate the impact on lung cancer burden and the benefits gained in association with the environmental policy change in Beijing, China. Based on population-based cancer registration data during 2001–2016, using a spatiotemporal Poisson regression model, long-term concentrations of PM 2.5 were linked to sex-age adjusted incidence rates of total lung cancer and its pathological subtypes. We calculated the health and monetary benefits associated with air quality improvement using the cost of illness method. In the constructed regression model, a 10 μg/m3 increment of PM 2.5 was associated with increases of 6.0% (95% confidence interval [95% CI]: 4.3%, 7.7%), 14.8% (10.3%, 19.4%), and 6.5% (3.3%, 9.8%) in the incidence of total lung cancer, squamous cell carcinoma, and adenocarcinoma, respectively. The estimated associations indicate that long-term exposure to PM 2.5 contributed 1947 to 3059 incident cases of lung cancer per year among the residents in Beijing during the study period. Clean air actions saved 4978 (95% CI: 2711, 7417) lung cancer cases, which brought a savings of 218 (118, 324) million RMB (~31 [17, 46] million US dollars) in direct inpatient medical expenditures. If air quality had met national standards of long-term PM 2.5 (35 μg/m3) in 2014–2016, 10,003 (95% CI: 9325, 10,650) lung cancer cases could have been prevented and direct inpatient medical expenditures of 438 (409, 466) million RMB (~63 [58, 67] million US dollars) could have been saved. This study enriches epidemiological study, confirming the association between exposure to PM 2.5 and lung cancer or its subtypes, and provides novel evidence for the notable reduction in lung cancer burden and medical expenditure savings that were achieved through air quality improvements in Beijing from 2014 to 2016. Unlabelled Image • An ambient PM 2.5 exposure-lung cancer risk function was developed. • PM 2.5 exposure was associated with increased risk of lung cancer. • The effect was stronger for squamous cell carcinoma than adenocarcinoma. • Lung cancer risk attributable to PM 2.5 decreased during 2001 through 2016. • The clean air actions saved substantial medical costs by preventing lung cancer. [ABSTRACT FROM AUTHOR]