Background Oral Lichen Planus (OLP) is a chronic inflammatory disorder that may progress to Oral Squamous Cell Carcinoma (OSCC). Lipid metabolism dysregulation has been implicated in tumor development and immune response modulation. This study aims to explore the role of lipid metabolism, particularly the lipids diacylglycerol (DAG), triacylglycerol (TAG), and phosphatidylcholine (PC), in the progression from OLP to OSCC, and to identify potential therapeutic targets for prevention and treatment. Methods We performed a Mendelian randomization (MR) analysis to investigate the causal relationships between lipid metabolism and the risk of OLP and OSCC. Differential gene expression analysis was conducted to identify key genes related to lipid metabolism. The interactions of lipid species and key genes were examined using drug databases (DrugBank, DGIdb, and TCMSP) to explore potential drug candidates. Enrichment analysis of signaling pathways, including PPAR signaling, was also conducted to understand the underlying mechanisms. Results Our MR analysis revealed that DAG exerts a protective effect in OLP (OR < 1), but its role shifts to a risk factor in OSCC (OR > 1), potentially by altering the tumor immune microenvironment. TAG and PI dysregulation also plays a critical role in tumorigenesis. Gene expression analysis identified several key lipid metabolism-related genes, including SLC27A6, FABP3, FABP4, ADIPOQ, and PLIN1, whose expression differed between OLP and OSCC, highlighting their importance in tumor progression. These genes were enriched in the PPAR signaling pathway, suggesting its involvement in tumor growth and immune modulation. Potential drug candidates, such as palm acid (PA), Imatinib, and Curcumin, were identified through drug-repurposing strategies. Conclusion Lipid metabolism dysregulation plays a crucial role in the progression of OLP to OSCC. Targeting key lipid metabolism pathways and genes, such as DAG, TAG, PI, and the PPAR pathway, may offer promising strategies for early diagnosis and therapeutic intervention. This study provides novel insights into the molecular mechanisms of OLP-to-OSCC progression and suggests potential drug candidates, including natural compounds, for future clinical applications. Further research is needed to validate these findings in clinical settings.