The objective of this study was to determine the levels of indoor radon concentration in houses in Bahi District situated in the neighbourhood of uranium deposit. The study aimed also to assess the annual effective dose due to indoor radon exposure to individuals residing in the houses as a step to control the radon exposure in Tanzania. Two villages were involved in this study; Bahi Makulu, which is within the proximity of Uranium deposit and Bahi Sokoni, which is about 7 km from the deposit. The Indoor radon concentration levels were detected using Alpha Guard radon monitor and the obtained mean concentration levels are presented and compared with the mean concentrations levels published in literature. The results revealed that 78% of the houses involved in this study have concentration levels of indoor radon above the reference level of 100 Bq/m3 set by WHO 2009. The levels are higher in traditional houses which are mostly built with poor ventilation than the modern houses with good ventilation. Out of the two villages involved in this study, Bahi Makulu which is closer to the uranium deposit has significantly higher (p<0.01) concentrations of indoor radon than Bahi Sokoni. The calculated annual effective doses for the population in both villages are higher than the dose reference level of 1 mSv/y.