The easiest way to locate a dragon lair is by means of a map. Dragon lair maps will drop randomly from any mob faction including mob factions from afar. When trading or running mob factions from afar you may come across 'a well-worn map' this is a lair map.

When you find a map the command 'checkmap' will compare any maps you might have and remove and duplicate or vanquished lairs.

Looking at your map will show you the exact location of the dragon lair's entrance.

As described on the screenshot, to reach the lair entrance, hold the map and type fly map while mounted on a dragon. This will take you to the wilderness room directly above the entrance.

Walk down into the lair.

NOTE: Dragon lairs are Grave Neutral Player Killing areas.

The less common way of locating a dragon lair is following their trail in the wilderness. When near a dragon lair you will see tell tale signs of a dragon's presence all over the wilderness

If you come across these messages (among others) you are close to the resting place of a dragon!