Light Emitting Diode (LED) has many advantages, such as little volume, light weight, low power consumption, long life, high reliability and quick response speed. It can be used as the luminous device of many beacons which are widely applied to indicating lamp, display screen, traffic guidance and production automation. In this paper, the operating range formula of LED is deduced. For the observation equipment used in common, the further analysis on LED's application is also completed. If the camera with minimum luminosity of 0.02 lux and middle resolution is used as observation equipment, the operating range of LED with radiation power of 6mW and semiapex angle of 25° can be more than 1.5km. The experimental results have verified the correctness of the theory analysis.