Lung cancer is proving to be a shattering threat to human-beings which is more common in people who used to smoke. Out of 100 different types of cancers observed in human body this is the third largest found cancer with less survival rate. Early detection of lung cancer can increase the chance of survival among people. Various image processing and soft computing techniques can be used to determine cancer cells from medical images. . Image processing is one of the areas to detect the lung cancer. In image processing, different algorithms are present to detect the tumors. The basic techniques are conversion, segmentation, histogram, thresholding, enhancement techniques. The proposed methods include pre-processing, histogram generation, segmentation, thresholding and additionally template matching algorithm. In this technique we use the CT scan image for the complete process.