LEAD: Owen Lattimore, a Far East scholar who was a principal target of Senator Joseph R. McCarthy in the 1950's, died in his sleep early yesterday at Miriam Hospital in Providence, R.I., relatives said. He was 88 years old and lived in Pawtucket, R.I.

Owen Lattimore, a Far East scholar who was a principal target of Senator Joseph R. McCarthy in the 1950's, died in his sleep early yesterday at Miriam Hospital in Providence, R.I., relatives said. He was 88 years old and lived in Pawtucket, R.I.

Mr. Lattimore, an authority on the history, culture and politics of East Asia, suffered a stroke a year ago and had been in declining health for the last two weeks, suffering from pneumonia and bronchitis, his grandson Michael Lattimore said. He was admitted to the hospital Tuesday.

Mr. Lattimore was thrust into public view in March 1950 when Senator McCarthy made a much-quoted assertion that he was ''the top Soviet espionage agent in the United States.'' The Wisconsin Republican later modified the charge to say that Mr. Lattimore was ''one of the top'' agents. He accused him of having deliberately instigated American foreign policy failures in the Far East.

A Senate Foreign Relations subcommittee looked into the accusations, concluded that they had no basis and exonerated Mr. Lattimore in a report in July 1950. Accusation of Perjury

But two years later, a Federal grand jury indicted Mr. Lattimore on seven counts of perjury in connection with his testimony before the Senate Internal Security subcommittee investigating the Institute of Pacific Relations. The subcommittee was trying to determine whether the institute, an international research organization, was influenced or controlled by Communists. Mr. Lattimore was called to testify in 1951 because he had served as editor of the institute's journal, Pacific Affairs, from 1934 to 1941. He denied he was ever ''a follower of the Communist line'' or a ''promoter of Communist interests.''

In 1955, a Federal judge dismissed the main counts of the indictments, calling the charges so ''formless and obscure'' that they would make a ''sham of the Sixth Amendment'' to require Mr. Lattimore to go to trial on them. The Government later dropped the entire case for lack of evidence.

Mr. Lattimore, reflecting in an interview in 1979, said, ''The McCarthy episode, in which I was exonerated, was but a small chapter in my life, which has been very interesting and satisfying as a scholar, teacher and writer.'' Work in Maryland and Britain

He lectured at the Johns Hopkins University in Baltimore from 1938 to 1963 and was the director of its Walter Hines Page School of International Relations from 1939 to 1953. He was head of the department of Chinese studies at Leeds University in Britain from 1963 until he retired in 1975.

About 25 years of his life were spent in the Far East.

Owen Lattimore was born July 29, 1900, in Washington, the son of David Lattimore, a Dartmouth College professor, and the former Margaret Barnes. He spent much of his boyhood in China, where his father had gone to teach French, German and Spanish. He was sent to Europe for formal schooling, attending the College Classique Cantonal in Lausanne, Switzerland, in 1913 and 1914 and St. Bees School in Cumberland, England, from 1915 to 1919.

He did not attend college after completing his secondary education. Instead, he returned to China, where he was briefly a reporter with the Tientsin and Peking Times before joining a company that exported produce from the China's western frontier.

In 1925 he quit his job to travel for two years in Mongolia and far western China. In addition to further travels in the region, he did research on the area at Harvard University in 1928 and 1929 and in Peking from 1930 to 1933.

In 1941 Chiang Kai-shek, the leader of the Nationalist Chinese Government, named Mr. Lattimore to be his personal American adviser. A year later, he returned to the United States to become deputy director of Pacific operations for the Office of War Information, a position he held until 1944, when he returned to Johns Hopkins.