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Abstract: Vehicle Petrol theft is one of the main concerns of many bike owners and car owners. Many times, we have heard or some of us have already faced that petrol from their bike or cars has been stolen. Main intention of this project is to avoid such situation.In GSM based petrol theft detection system, we have used a Level sensor to detect the petrol level in petrol tank. If the level goes below certain threshold level, then this sensor gives a particular signal to the microcontroller. The level sensor is activated only when the ignition key is removed so that no inconvenience is caused to the driver while driving. The microcontroller then turns on the buzzer and sends SMS to the car/bike owner. Microcontroller is the main heart or Central Processing Unit of the system. Apart from this, the project also has a gas sensor which will detect any fuel leaks in the system. GSM based Fuel Theft Detection System finds application in Car, Bikes and all other vehicles. This project has a GSM Transmitter which send SMS to owner of vehicle when there is fuel theft going on.This project focuses on the fuel theft problem and puts forward an effective solution for the same. I feel that the product serves something good to this world and we are better able to understand the various facets of doing an embedded system project which is emerging as one of the most 'in demand' technologies in this decade.