There are many ways in which you can install Mac OS X Lion 10.7 on a compatible Mac computer once downloaded from the Mac App Store. You can archive the downloaded file and create a bootable OS X Lion DVD or even install the OS on a separate partition on the same computer running Snow Leopard. However, for installation on Macs such as a MacBook Air with no optical media, it is also possible to create a bootable USB flash or external hard drive using the downloaded OS X Lion installer file. We show you how easily its done!

Step 1:

Once you have downloaded the OS X Lion installer from the Mac App Store, navigate to the folder containing the installer then right click on it and select “Show Package Contents”.

Step 2:

Now open the “Contents” directory and go into “SharedSupport”.

Step 3:

You will see “InstallESD.dmg” inside. Double-click it and it will mount the Lion disk image onto your Mac desktop.

Step 4:

Now plug your USB flash or external hard drive into the Mac and open up Disk Utility from the Utilities.

Step 5:

Select your USB drive from the left side and click on the “Erase” tab while making sure you choose “Mac OS Extended (Journaled)” as the Formatting option.

Step 6:

Once the format completes, right-click on the USB drive in Disk Utility and select “Restore”.

Step 7:

Just drag and drop the already mounted “Mac OS X Install ESD” image into the “Source” field and hit Restore.

Step 8:

Thats it, your bootable Mac OS X Lion USB installation drive will be ready once the restore is completed!

You can now install Mac OS X 10.7 Lion on any compatible Mac with this USB drive. Simply plug it in, hold down the Option key during boot and select the Lion formatted drive to begin installation.

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[via OSXDaily]