This paper presents an incentive-based demand response (DR) scheme for a small residential area including several houses. It is supposed that there is an aggregator on one side and the residential consumers on the other side, which both of them want to achieve an optimal solution for themselves. For this reason, the Stackelberg game is adopted in this paper to consider the interaction between aggregator and consumers. This game would have one leader (aggregator) and N followers (consumers). Each consumer is assumed to have two kinds of load, namelycritical load, which is not intended for DR, and Heating, ventilation, and air conditioning (HVAC) system, which is considered as a potential for participating in DR. The proposed strategy is organized in a way that aggregator offers incentives to the consumers in order to change their load while consumers try to maximize their bonus getting from aggregator.