License Plate recognition (LPR) system is a key to many traffic related applications such as road traffic monitoring or parking lots access control. This paper proposes an automatic license plate recognition system for Saudi Arabian license plates. The system presents an algorithm for the extraction of license plate and segmentation of characters. Recognition is done using template matching. However the proposed work seems to be the first attempt towards the recognition of Saudi Arabian license plates. The performance of the system has been investigated on real images of about 710 vehicles captured under various illumination conditions. Recognition of about 96% shows that the system is quite efficient.