This is a common question that a MAC user will ask themselves before buying $29.99 worth of Application so here is some details that I found in the net :
From Apple Store :
Step 1: Make sure your Mac can run Lion.
Your Mac must have an Intel Core 2 Duo, Core i3, Core i5, Core i7, or Xeon processor to run Lion. Find out if your current Mac has one of these processors by clicking the Apple icon at the top left of your screen, then choosing About This Mac.
Step 2: Make sure you have the latest version of Snow Leopard.
Get up to date with the latest version of OS X Snow Leopard to purchase OS X Lion from the Mac App Store. If you have Snow Leopard, click the Apple icon and choose Software Update to install version 10.6.8.
Step 3: Download OS X Lion from the Mac App Store.
When OS X Lion is released in July, open the Mac App Store from your Dock to buy and download it. Then follow the onscreen instructions to install Lion.
Above mentioned instructions seems to be easy but there are some other instruction that has been made by Topher Kessler, Writer from CNET on how to check the Mac System, He said that the OS X Lion will run at exclusively in 64-bit mode and therefore require a 64-bit CPU. It also means that there are some macs that was purchased before Apple produced 64 bit MAC will not be able to work on this new OS. He has other suggestion as follows :
If you need further verification that your computer will work, then you can open the Terminal application (in the /Applications/Utilities/ folder) and follow these steps:
Copy and paste the following command to the Terminal, and press Enter:
sysctl hw.model hw.machine
Check the first line of the output, and see if it matches anything in the following table (models that will not run Lion):
Mac Mini 1.1
MacBook Pro 1.1 iMac 4.2 MacBook 1.1 MacBook Pro 1.2
If your Mac’s model number matches one in the table then you will not be able to run Lion; however, if your Mac is not in the table then check the second line of the command output to see if it says "x86_64." If the second line says "x86_64" then you will be able to run OS X 10.7 Lion. If it says something else then as long as your model number is above those in the table then you should be good to go. For instance, if you have a "MacMini 2,1" then your system will run Lion.
We hope that this tutorial will help our mac users decide if their mac will be able to successfully install MAC OS X.