The bar code system has been utilized to automate the postal service. Among several bar code systems, 4 state bar code has some advantages over other types of bar codes. It is robust and discribes letters as well as numbers. In this paper, the image processing algorithm to recognize 4 state bar code is presented. This system consists of 2D CCD camera, DSP board and 486 PC. Gradient direction is used to extract the bar code area. The proposed system is able to process one mail at approximately 1 second which is rotated at any angle.