In busy roads and parking areas, Number plate recognition is the best method to identify illegal number plates. Number plate extraction provides instantaneous results and desires very high accuracy .This method offers 90% of potency and has been tested with nearly n-number of vehicles.Number plates are employed for identification of vehicles everywhere around the Nations.There are two methods to recognize vehicles. They are manual method and automatic method. Vehicle recognition can be done by image processing by recognizing vehicles by their number plates. Automatic vehicle identification systems are aimed at effective traffic management and security applications like access control to restricted areas and chase of non-registered vehicles. In Vehicle identification, the best and less complicated method is Number Plate Recognition.The image which is recorded in the camera is given as input. The image which is captured can be extracted from the camera and seen on television for verification purposes. Licensed plate recognition involves a special algorithmic program which accommodates steps like Edge Detection and Morphological operation smoothing, segmentation of characters and recognition of plate characters. With the help of these steps, the licensed number plate was successfully recognized.