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Background: MicroRNAs (miRNAs) function as potential diagnostic biomarkers in various cancers. This study aimed to evaluate the roles of miR‐205‐5p in lung cancer progression and diagnosis. Materials and Methods: MiR‐205‐5p was detected by quantitative real‐time PCR. The effect of miR‐205‐5p on cell proliferation and metastasis was estimated by MTT and flow cytometry. The expression of TP53INP1 and related genes was analyzed by immunoblotting. The diagnostic value of miR‐205‐5p was analyzed using receiver operating characteristic (ROC) curve analysis, sensitivity, and specificity. Results: The miR‐205‐5p was increased in lung cancer tissues. MiR‐205‐5p mimics were promoted but its inhibitor suppressed cell proliferation and metastasis compared with control treatment in vitro and in vivo. By regulating the 3′ untranslated region, miR‐205‐5p could negatively regulate TP53INP1 expression, which further inhibited the expression of RB1 and P21, but increased that of cyclinD1. Moreover, the serum miR‐205‐5p levels of patients with lung cancer were significantly higher than those of normal controls, and they were correlated with patients' gender, drinking status, and clinical stage. The area under the ROC curve of serum miR‐205‐5p in the diagnosis of non‐small‐cell lung cancer was 0.8250, respectively. The finding supported its possession of high diagnostic efficiency for lung cancer. Conclusions: MiR‐205‐5p promoted lung cancer cell proliferation and metastasis by negatively regulating the novel target TP53INP1, which further affected the expression of P21, RB1, and cyclin D1. Serum miR‐205‐5p is a novel and valuable biomarker for lung cancer diagnosis. [ABSTRACT FROM AUTHOR]