A License Plate Recognition (LPR) System is one kind of Intelligent Transport systems and is of considerable interest because of its potential applications to areas such as highway electronic toll collection, Traffic Monitoring System and so on. This paper proposes an automatic license plate recognition system for Saudi Arabian license plates. The system captures the images of the vehicles with a digital camera. An algorithm for the extraction of license plate has been designed and an algorithm for segmentation of characters is proposed. The performance of the system has been investigated on real images of about 610 vehicles captured under various illumination conditions. Recognition of about 95% shows that the system is quite effective.