I want to add a zip file into installation setup in c sharp. I am using visual studio 2010.

You'll probably have to use a Deployment Project. Here's the MSDN article on that. If I'm not mistaken though, basically add the file to the project through the Add-Existing Item menu option, and it should get installed with the rest of your project.

commented: Interesting info for everyone! +14

But on adding zip file into the setup and on installing the setup, zip file is getting corrupted.

What method are you using?