Currently, the grading of yarn in the textile industry is a subjective measurement. Cotton yarn is graded according to a standardized procedure outlined in ASTM Standard D2255-90 for textiles. Image Analysis could be the basis for worldwide standardization and automation of this process. Image Analysis would eliminate the subjective human eye comparison of photographs of yarn boards and substitute a yarn appearance standard that can be readily adapted to computer technology The experimental system reported here includes a video line camera, a lighting system and a yam transport system. The various yarn grades are assigned by counting the number and lengths of small sections of yarn which fall outside specified tolerance levels. Tolerance levels are developed through observation and affect on subsequent processing and fabric quality.