This paper presents a system to recognize Macao license plates. Sobel edge detector is employed to extract the vertical edges, and an edge composition algorithm is proposed to combine the edges into candidate plate regions. They are further examined on the existence of the character “M” by a verification algorithm. A row separation algorithm is also proposed to cater both one–row and two–row types of plates. Projection analysis and template matching methods are exploited to segment and recognize the characters. Various pre and post processing steps are proposed other than traditional implementation so as to improve the recognition accuracy. This work achieves a high recognition rate of 95%. © 2011 Taylor & Francis Group, LLC.