Proteoglycans with their attached negatively charged glycosaminoglycans (GAGs) play a crucial role in proper tissue morphology and function throughout the body. Their complex meshwork exists either as thin sheet-like basement membranes lining epithelial cells as in airway bronchial and alveolar epithelial tissue or as a meshwork-like interstitial extracellular matrix (ECM) that forms porous three-dimensional networks around cells. Vast variability due to modifications of the protein core and different stoichiometry of the GAG chain substitutions leads to a myriad of functions that can generally be divided into four categories: modulation of tissue mechanical properties, regulation and protection of the ECM, sequestration of proteins, and regulation of cell signaling. Proteoglycans can be classified into intracellular, cell-surface, pericellular, and extracellular proteoglycans, and their functions are commonly mediated by binding to collagen, cytokines, growth factors, and morphogens. In several chronic lung disorders, the turnover of the ECM including proteoglycans is altered, highlighting the importance of ECM homeostasis for functional lung physiology. Loss of proteoglycans can result in severe tissue dysfunction ranging from poor mechanical properties, especially important in the lung, to uncontrolled inflammation. Emerging functions for proteoglycans in bioengineering applications may have a significant impact in the field as it opens paths for the development of new therapies.