We studied the spatial distribution of cancer incidence rates around a large steel plant and its association with historical exposure. The study population was close to 600,000. The incidence data was collected for 1995–2006. From historical emission data the air pollution concentrations for polycyclic aromatic hydrocarbons (PAH) and metals were modelled. Data were analyzed using Bayesian hierarchical Poisson regression models. The standardized incidence ratio (SIR) for lung cancer was up to 40% higher than average in postcodes located in two municipalities adjacent to the industrial area. Increased incidence rates could partly be explained by differences in socioeconomic status (SES). In the highest exposure category (approximately 45,000 inhabitants) a statistically significant increased relative risk (RR) of 1.21 (1.01–1.43) was found after adjustment for SES. The elevated RRs were similar for men and women. Additional analyses in a subsample of the population with personal smoking data from a recent survey suggested that the observed association between lung cancer and plant emission, after adjustment for SES, could still be caused by residual confounding. Therefore, we cannot indisputably conclude that past emissions from the steel plant have contributed to the increased risk of lung cancer.