Somatic long interspersed element-1 (LINE-1) retrotransposition is a genomic process that relates to gene disruption and tumor occurrence. However, the expression and function of LINE-1 retrotransposition in lung squamous cell carcinoma (LUSC) remain unclear. We analyzed the transcriptomes of LUSC samples in The Cancer Genome Atlas and observed LINE-1 retrotransposition in 90% of tumor samples. Thirteen LINE-1 retrotranspositions of high occurrence were identified and further validated from an independent Chinese LUSC cohort. Among them, LINE-1-FGGY (L1-FGGY) was identified as the most frequent LINE-1 retrotransposition in the Chinese cohort and significantly correlated with poor clinical outcome. L1-FGGY occurred with smoke-induced hypomethylation of the LINE-1 promoter and contributed to the development of local immune evasion and dysfunctional metabolism. Overexpression of L1-FGGY or knockdown of FGGY promoted cell proliferation and invasion in vitro, facilitated tumorigenesis in vivo, and dysregulated cell energy metabolism and cytokine/ chemotaxin transcription. Importantly, specific reverse transcription inhibitors, nevirapine and efavirenz, dramatically countered L1-FGGY abundance, inhibited tumor growth, recovered metabolism dysfunction, and improved the local immune evasion. In conclusion, hypomethylation-induced L1-FGGY expression is a frequent genomic event that promotes the development and progression of LUSC and represents a promising predictive biomarker and therapeutic target in LUSC.