Trace Debugging is a software diagnostic technique for embedded real-time systems. It is developed to give embedded software developers the ability to trace the activity of the processor even when it is operating out of cache. This ability is lost on many high performance processors and in real-time systems. Tools for debugging real-time systems are scarce [5, 13]. This paper describes work that was performed on a new method of trace debugging that can be used to aid in real-time debugging of embedded software. The technique described uses non-intrusive measurements that are supplemented with deductive algorithms. The technique developed in the study differs from traditional debuggers by utilizing the a-priori information that is available. The study utilized a Motorola 68020 as a model of a high performance processor, but the processes are applicable to many "high performance" processors. A software simulation was used to verify the results. The software simulates the microprocessor operation in both internal data manipulation and external bus operation. The simulation results were used to demonstrate the efficiency of the trace debugger. The testing verifies feasibility and shows the efficiency of trance debugging as a method to aid in the production of embedded software.