Lung boundary image segmentation is important for many tasks including for example in development of radiation treatment plans for subjects with thoracic malignancies. In this paper, we describe a method and parameter settings for accurate 3D lung boundary segmentation based on graph-cuts from X-ray CT data1. Even though previously several researchers have used graph-cuts for image segmentation, to date, no systematic studies have been performed regarding the range of parameter that give accurate results. The energy function in the graph-cuts algorithm requires 3 suitable parameter settings: K, a large constant for assigning seed points, c, the similarity coefficient for n-links, and λ, the terminal coefficient for t-links. We analyzed the parameter sensitivity with four lung data sets from subjects with lung cancer using error metrics. Large values of K created artifacts on segmented images, and relatively much larger value of c than the value of λ influenced the balance between the boundary term and the data term in the energy function, leading to unacceptable segmentation results. For a range of parameter settings, we performed 3D image segmentation, and in each case compared the results with the expert-delineated lung boundaries. We used simple 6-neighborhood systems for n-link in 3D. The 3D image segmentation took 10 minutes for a 512x512x118 ~ 512x512x190 lung CT image volume. Our results indicate that the graph-cuts algorithm was more sensitive to the K and λ parameter settings than to the C parameter and furthermore that amongst the range of parameters tested, K=5 and λ=0.5 yielded good results.