Radon is a naturally occurring radioactive gas and a major indoor contribution of exposure to ionizing radiation in dwellings. $^{222}Rn$ is a health hazard gas what is responsible for thousand lung cancer deaths every year. In this study, indoor radon concentrations present in thirty representative houses in Mahallat city, Iran, were determined in order to estimate lung cancer risk associated with residential radon exposure. Long-term passive method, using CR-39, was used to measure the radon concentration. The results showed an association between the age of the dwellings and the indoor radon concentration that was found, in that the concentration of radon tended to increase as the age of the dwelling also increased. The indoor radon concentrations were calculated to be within the range of $23{pm}2$ to $350{pm}26Bq{cdot}m^{-3}$, with an average of $158Bq{cdot}m^{-3}$. The annual effective dose from inhaled radon and its decay products was calculated between $0.8{pm}0.1$ and $12.3{pm}0.9mSv{cdot}y^{-1}$, with an average of $5.5mSv{cdot}y^{-1}$. By taking into consideration the EPA recommendation and ICRP statement, the average annual risk of lung cancer from inhaled radon was calculated as 0.09%, 0.06%, 0.01%, and 0.03% for current smokers (CS), those who had ever smoked (ES), never smokers (NS) and the general population, respectively.