In this study an image processing based olive seperation machine was developed. Mechanical and electronic of the machine was designed such this purpose. In mechanical design, air valves were used for separation of olives. The air valves were controlled with a designed electronic card according to results of the image processing algorithm. Position of detected olives was switched with air. U-eye UI-3240-CP C camera was integrated to the system for image processing. Image processing algorithm was developed and optimized in Visual Basic 6.0 environment. Results of image processing algorithm were sent to electronic card via serial port. Developed image processing algorithm could process 30 frames per second. Based on the image processing algorithm the system could separate 30 olives per second which is satisfactory for real time operation.