In this paper, a navigation algorithm is proposed using RFID tags in indoor environments. Firstly, a stochastic sensor model of RFID is derived and the design factors including the maximum identifiable distance, the identification direction and the read success rate are obtained through experiments. The obstacle avoidance algorithm is developed with consideration of those factors for a variety of RFID antenna configurations and different indoor environments. The algorithm is tested by computer simulations and implemented on a mobile robot.