Scientists in Melbourne, Australia, used a ventilator and pump to keep the animal lungs alive and “breathing” while human blood flowed in them.
Experts estimated the work could lead to the first animal-human transplants within five years.
Dr Glenn Westall, who helped conduct the experiment, said: “The blood went into the lungs without oxygen and came out with oxygen, which is the exact function of the lungs.
“It showed that these lungs were working perfectly well and doing as we were expecting them to do.
“This is a significant advance compared to experiments that have been performed over the past 20 years.”
The breakthrough came after scientists were able to remove a section of pig DNA, which had made the pig organs incompatible with human blood.
Previous attempts to combine unmodified pig lungs and human blood ended abruptly two years ago when blood clots began forming almost immediately, causing the organs to become so blocked no blood could pass through.
Human DNA is now added to the pigs as they are reared to reduce clotting and the number of lungs which are rejected.
The full results of the research are due to be announced in Vancouver in August.
The issue has prompted an ethical debate about the use of animals for human transplants.
Medical ethicist Professor Nicholas Tonti-Filippini said: “It is basically a human-pig, a hybrid, or whatever you want to call it.
“It is about whether the community is prepared to accept a part human, part animal.”