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Gather all ingredients.
Preheat oven to 350°F. Coat a 9- x 5-inch loaf pan with cooking spray. Line with parchment paper, leaving a 2-inch overhang on all sides; set aside.
Beat sugar and butter with an electric mixer on medium speed until light and fluffy, 2 to 3 minutes. Beat in eggs, 1 at a time, beating well after each addition, about 2 minutes total, stopping to scrape down sides of bowl as needed.
Beat in vanilla, lemon zest, and 2 tablespoons of the lemon juice until combined, about 15 seconds. Whisk together flour, poppy seeds, baking powder, baking soda, and salt in a medium bowl. Beat flour mixture into sugar mixture in 3 additions, alternately with sour cream, beginning and ending with flour mixture.
Transfer batter to prepared loaf pan, spreading into an even layer.
Bake in preheated oven until a wooden pick inserted in center comes out with a few moist crumbs, 50 to 55 minutes. Remove from oven, and let cool in loaf pan for 10 minutes. Using parchment paper overhang as handles, lift loaf from pan and let cool on a wire rack to room temperature, 1 hour to 1 hour and 30 minutes.
Whisk together powdered sugar, milk, and remaining ½ tablespoon lemon juice in a small bowl until smooth.
Drizzle evenly over cooled loaf, then garnish with poppy seeds and lemon slices.