Residential exposure to radon is considered as the second leading cause of lung cancer after smoking. The purpose of this study was to conduct a cost-effectiveness analysis of reducing the indoor radon levels in Sweden from the current reference level of 200 Bq/m to the WHO suggested reference level of maximum 100 Bq/m.We constructed a decision-analytic cost-effectiveness model using input data from published literature and administrative records. The model compared the increase in economic costs to the health benefits of lower indoor radon-levels in a Swedish policy context. We estimated the cost per life-year and quality adjusted life year (QALY) gained and assessed the robustness of the results using both deterministic and probabilistic sensitivity analysis.Including (excluding) costs of added life years the cost per QALY for existing homes was €130,000 (€99,000). For new homes the cost per QALY including (excluding) costs of added life years was €39,000 (€25,000).The results indicate that it is not cost-effective to reduce indoor radon levels from 200 Bq/m to a maximum of 100 Bq/m in existing homes, whereas it is cost-effective for new homes.