Lung cancer continues to rank as the leading cause of cancer deaths worldwide. One of the most promising techniques for early detection of cancerous cells relies on sputum cell analysis. This was the motivation behind the design and the development of a new computer aided diagnosis (CAD) system for early detection of lung cancer based on the analysis of sputum color images. The proposed CAD system encompasses of four main processing steps. First is the preprocessing step which utilizes a heuristic rule-based algorithm and a Bayesian classification method using the histogram analysis. In this step, the region of interest (ROI) representing the sputum cell is detected and extracted. Then, in the second step, the mean shift segmentation is applied to segment the nuclei from the cytoplasm. The third step is the feature analysis. In this step, geometric and chromatic features are extracted from the nucleus region. These features are used in the diagnostic process of the sputum images.Finally, the diagnosis is done using a rule-based algorithm alongside the neural network and support vector machine (SVM).