In this paper, image processing algorithm is studied to enhance the preciseness of the geometry while converting captured images to CAD data. A program is developed as a result. The code, in the image processing, utilizes outline trace, point data smoothing algorithm. It is capable of automatically generating design data by converting input image data to the CAD data. The output can be made in DXF, IGES formats. The current research can be utilized as a base data for the development of factory automation or flexible manufacturing system which adopt image processing based automatic inspection and measuring system.