We studied the effect of the presence of an air inhomogeneity on the dose distribution from an Iriduim-192 brachytherapy source. The source was modeled using Monte Carlo (MC) code MCNP5. The AAPM Task Group No. 43 (TG-43) parameters were calculated to validate our simulation. We also performed experimental measurements to measure the dose distribution using EBT3 Radiochromic film. The dose in water at distance 1 to 5 cm was scored in the presence of an air cavity of diameters (3, 5, and 7 mm) at 2 mm distance from the source. The MC dosimetry results agreed to within 2% with the AAPM ESTRO (AAPM report 229) consensus data. The MC dose distributions was within 8.2% agreement with radiochromic film measurement. The dose to water at 2 cm from the source decreased by 3%, 6%, and 9% in the presence of a 3, 5, and 7 mm diameter air cavity, respectively. This difference is clinically too significant to ignore.