Background Although neostigmine has been traditionally used for neuromuscular blockade reversal in thoracic surgery, incomplete reversal and potential pulmonary complications remain concerns. However, we did not preclude its clinical use. In contrast, sugammadex offers more predictable recovery of neuromuscular function with a superior safety profile. This study aims to compare the efficacy of sugammadex versus neostigmine in improving postoperative recovery outcomes. Methods This study is a prospective, randomized, double-blind trial. Patients above 65 years old undergoing video-assisted thoracoscopic lobectomy were randomly assigned to receive either sugammadex (2 mg/kg) or neostigmine (0.04 mg/kg) with atropine for neuromuscular block reversal after T2 appearance on TOF. The primary outcome was the quality of recovery at postoperative day (POD) 1, assessed by the QoR-15 questionnaire. Secondary outcomes included extubation time, PACU stay, incidence of hypoxaemia, PRNB, and postoperative pulmonary complications (PPCs). Results Data analysis included 77 patients (39 in Group S and 38 in Group N). The QoR-15 scores were significantly higher in the sugammadex group at day 1 (125 vs. 122, P < 0.001). Sugammadex significantly reduced extubation time (18 vs. 27.5 min, P = 0.001) and PACU stay (52 vs. 62 min, P = 0.001). Hypoxaemia (28% vs. 53%, P = 0.029) and PRNB (5% vs. 24%, P = 0.020) were less frequent in the sugammadex group. The sugammadex group had fewer PPCs, the difference was not statistically significant (26% vs. 45%, P = 0.079). Conclusions For elderly patients receiving VATS lobectomy, sugammadex is beneficial for acute recovery except PONV up to POD1 recovery quality mainly in ease of breath, eating, resting but not in postoperative outcomes over one month. Trial registration Retrospectively registered, Chinese Clinical Trial Registry, ChiCTR2400089863(Date:18/09/2024).