Hyperpolarized ¹²⁹Xe magnetic resonance imaging (MRI) is an emerging, noninvasive, radiation-free pulmonary functional imaging technique. By inhalation of hyperpolarized ¹²⁹Xe gas and the use of multiple MRI sequences, it enables visualized and quantitative assessment of pulmonary ventilation, gas exchange, and alveolar microstructural alterations. Compared with pulmonary function tests (PFT) and computed tomography (CT), its main advantage lies in its greater sensitivity for detecting small airway abnormalities, gas exchange impairment, and disease heterogeneity. The main methods for pulmonary function assessment using hyperpolarized ¹²⁹Xe MRI are reviewed, and their clinical applications and preclinical advances in lung disease diagnosis and management are discussed in comparison with PFT and CT, offering a new technical perspective for pulmonary functional imaging and precise assessment.