||Automated Guided Vehicle (AGV) system is one of the most common used automated material handling systems that have been adopted in warehousing and manufacturing application. Due to the flexibility and the automation ability it can provide, AGV system is now becoming more and more important in recent years. AGV system was developed for more than fifty years but the penetration is not satisfactory because of the high cost and navigation problem. So this thesis will mainly focus on the development of a better alternative of AGV navigation system. Estimating physical location of a mobile object in an indoor manufacturing environment is an essential element in developing an automated robotic application likes the AGV system. Today, many location systems have been developed to determine location information based on different mechanisms. Among those mechanisms, determining location using ultrasonic time-of-flight lateration can provide sub-metric accuracy with relatively low implement cost, which makes the systems more suitable in real life application. In this study, we have successfully developed the pioneer work for a novel AGV system which has lower cost and better performance than the existing AGV system. A prototype of the system is implemented and the performance of the system is evaluated by comparing with other existing positioning systems.