owadays wireless networks are being used for objects, human or animal localization, such as GPS system. Because of its Insufficiency in indoor places, various systems are introduced for indoor localization. All of the methods have advantages and disadvantages. For example Infra Red or 802.11 based transmitters and receivers. Recently the RFID technology is widely used in indoor localization. These systems are capable to send the data in high range and are precise enough. This technology is, in fact, a wireless system which exchanges the date between a tag and a reader. To amplify the available surrounding signals an antenna is used, considering that these systems’s operation is based on electromagnetic wave propagation and radio frequency variations. Although there are some disorders with the propagation of these radio waves in indoor places, which arise to multi-path, diffraction, rare line of sight, absorption and reflection. Overall three kinds of algorithms are used in localization systems. In these algorithms analyzing the collected data, distances estimating methods or vicinity based methods are used. RFID based plans are discussed in two major categories. These systems have used the indoor localizations basics and became adapted to RFID’s characteristics. And also are relied on analyzing the environment using the reference tags. In this thesis with presenting two methods in ideal environment, a proposed method is also presented. First a localization algorithm is offering by using a mobile reader in ideal environment. Then the movement of the reader is modeling with the idea of changing the signal’s transmission power. Second method is also presented in ideal environment. At last, the recommended localization algorithm with a different approach and using the idea of reference tags, alteration power of signal transition and preparatio an environment radio plan is offering. At the end the recommended algorithm is simulated and its efficiency is evaluated by varying each characteristic parameters of RFID system. Keywords: RFID, Reference tag, Target tag, Localization algorithm, Simulation, RFID system