Background: Pain following thoracotomy is frequently associated with clinically important abnormalities of pulmonary function. The aim of the current study was to compare the efficacy of continuous thoracic epidural analgesia (EDA) to continuous intercostal (IC) block for postoperative pain and pulmonary function in a prospective, randomized, double-blinded clinical trial. Methods: Fifty patients undergoing lung lobectomy for malignancies were randomized into two groups (25/group). Respiratory function (forced vital capacity, forced expiratory volume per 1 s/forced vital capacity, maximum midexpiratory flow rate, peak expiratory flow rate) were evaluated preoperatively, within 4 h after the operation and on the first postoperative day. Visual analog scale (VAS: 0–10) scores were evaluated four-hourly for 20 h. Results: The VAS scores were significantly lower in the EDA versus IC group at the 4th, 8th, and 12th h of observation (mean ± SD) 5.5 ± 2.9 vs. 7.3 ± 2.2 P = 0.04; 4.1 ± 2.1 vs. 5.1 ± 2.9 P = 0.02; 3.6 ± 1.9 vs. 5.2 ± 2.4 P = 0.01, respectively. Respiratory function parameters deteriorated significantly in both groups (P < 0.001) with no significant difference between the groups. Only one major adverse effect was detected: one patient suffered from rib osteomyelitis after intercostal cannulation and healed following surgical repair. Conclusions: The results of the present study show that following thoracotomy in the early postoperative period continuous EDA is a better pain relieving method than continuous IC block, as indicated by the VAS scores.