Lung cancer is the leading contributor to cancer deaths in the developing world. Within countries, significant variability exists in the prevalence of lung cancer risk, yet limited information is available whether some of the observed variability is associated with differences in the consumption pattern of local tobacco products with differing potency. We recruited 606 lung cancer cases and 606 controls from the B.P. Koirala Memorial Cancer Hospital in Nepal from 2009-2012. We estimated odds ratios (ORs) and 95% confidence intervals (CI) for lung cancer risk associated with different tobacco products, using unconditional logistic regression. Unfiltered cigarettes tended to be the most frequently used products across ethnic subgroup with about 53.7% of Brahmins, 60.1% of Chettris, and 52.3% of Rai/Limbu/Magar/others. In contrast, about 39.9% of Madishe/Tharu smokers reported using bidi compared with only 27.7% who smoked unfiltered cigarettes. Among those who only smoked one type of product, choor/kankat smokers had the highest lung cancer risk (OR 10.2; 95% CI 6.2-16.6), followed by bidi smokers (OR 5.6; 95% CI 3.6-8.7), unfiltered cigarettes (OR 4.9; 95% CI 3.4-7.2), and filtered cigarettes (OR 3.4; 95% CI 2.2-5.3). A clear dose-response relationship was observed between increased frequency of smoking and lung cancer risk across all ethnic subgroups. These results highlight the important role of traditional tobacco products on lung cancer risk in the low income countries.