Electrical energy consumption is expected to increase in Malaysia, and illumination is the second largest electric power consumption in Malaysia. Remarkably, the majority of residential illumination is carried out with incandescent lamps which consume a high level of energy in comparison with recent high ef?cient technologies. Light Emitting Diodes (LED) could possibly be an option to replace incandescent lamps and even ?uorescent lamps (FL). This paper outlines the overview of Malaysia energy sector, policy and programs; and calculate possible savings in terms of energy, costs and environmental emissions by using LED lamps in Malaysia. Despite the capital cost of energy-ef?cient LED lamps, the use of LEDs might make economic sense for households due to the reduction in operational energy (OE) in certain stage. By replacement of incandescent with LED, a signi?cant reduction in annual energy use, electricity bill, CO2 and other greenhouse gas emission in terms of lighting can be accomplished by each household in Malaysia. It is also suggested that the governments ?nancial support and regulations assist in adopting this energy-ef?cient technology more rapidly.