Rationale: Radiotherapy is considered the standard treatment for patients with stage I or II non-small lung cancer who are not surgical candidates because of comorbities or preferences against surgery. Objectives: To compare the outcomes of patients treated with radiotherapy alone to those untreated to assess the effect of radiotherapy on survival. Methods: Using the Surveillance, Epidemiology and End Results registry linked to Medicare files, we identified 6,065 unresected patients with histologically confirmed stage I and II non-small-cell lung cancer, diagnosed between 1992 and 2002. We used propensity score methods and instrumental variable analysis to control for the possible effects of known as well as unmeasured confounders. Results: Overall, 59% of patients received radiotherapy. Overall and lung cancer-specific survival of unresected patients treated with radiotherapy was significantly better compared to the untreated cases (p<0.0001 for both comparisons). Radiation therapy was associated with a 6-month improvement in median overall survival. Propensity score analyses showed that radiation therapy was associated with improved overall (hazard ratio: 0.74, 95% confidence interval: 0.70-0.78) and lung cancer-specific survival (hazard ratio: 0.73, 95% confidence interval: 0.69-0.78). Instrumental variable analysis also indicated improved outcomes among patients treated with radiotherapy. Conclusions: Radiotherapy improves survival of elderly patients with unresected stage I or II lung cancer. These results should be confirmed in prospective trials.