RATIONALE Radiotherapy (RT) 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 RT alone with those who were untreated to assess the effect of RT on survival. METHODS Using the Surveillance, Epidemiology and End Results (SEER) registry linked to Medicare files, we identified 6,065 unresected patients with histologically confirmed stage I and stage 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. MEASUREMENTS AND MAIN RESULTS Overall, 59% of patients received RT. The overall and lung cancer-specific survival of unresected patients treated with RT was significantly better compared with the untreated cases (P < 0.0001 for both comparisons). RT was associated with a 6-month improvement in median overall survival. Propensity score analyses showed that RT 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 RT. CONCLUSIONS RT improves survival of elderly patients with unresected stage I or II lung cancer. These results should be confirmed in prospective trials.