The state of household waste recycling in Lahore city, Pakistan with a population of 7.2 million was analyzed. Data on solid waste recycling were gathered from residents of low-, middle- and high-income groups, as well as from scavengers and junkshops. The recycling activities in Lahore exert a significant impact on resource conservation, creation of jobs, provision of economic opportunity and reduction in the magnitude of waste disposal problems. A cost analysis is presented to show the income that can be generated through a well-planned recycling program. It is shown that 21.2% of all recyclable waste in Lahore is recycled, and it generates an amount of Rs. 271 million (US dollars 4.5 million) per year through the informal sector. However, if the recycling practice is owned by the formal sector, it can save an amount of Rs. 65 million by reducing the collection cost. If recycling is adopted as an industry, it can generate revenues of Rs. 530 million (US dollars 8.8 million) per year and can also save enormous amount of energy, as well as the natural resources.