BACKGROUND: Few cohorts have study populations large enough to conduct molecular analysis of ex vivo lung tissue for genomic analyses. Transcriptome imputation is a non-invasive alternative with many potential applications. We present a novel transcriptome-imputation method called the Lung Gene Expression and Network Imputation Engine (LungGENIE) that uses principal components from blood gene-expression levels in a linear regression model to predict lung tissue-specific gene-expression. METHODS: We use paired blood and lung RNA sequencing data from the Genotype-Tissue Expression (GTEx) project to train LungGENIE models. We replicate model performance in a unique dataset, where we generated RNA sequencing data from paired lung and blood samples available through the SUNY Upstate Biorepository (SUBR). We further demonstrate proof-of-concept application of LungGENIE models in an independent blood RNA sequencing data from the Genetic Epidemiology of COPD (COPDGene) study. RESULTS: We show that LungGENIE prediction accuracies have higher correlation to measured lung tissue expression compared to existing cis-expression quantitative trait loci-based methods (median Pearson's r = 0.25, IQR 0.19-0.32), with close to half of the reliably predicted transcripts being replicated in the testing dataset. Finally, we demonstrate significant correlation of differential expression results in chronic obstructive pulmonary disease (COPD) from imputed lung tissue gene-expression and differential expression results experimentally determined from lung tissue. CONCLUSION: Our results demonstrate that LungGENIE provides complementary results to existing expression quantitative trait loci-based methods and outperforms direct blood to lung results across internal cross-validation, external replication, and proof-of-concept in an independent dataset. Taken together, we establish LungGENIE as a tool with many potential applications in the study of lung diseases.