An efficient image processing algorithm is proposed to recognize both the height and width modulated barcodes which are rotated and printed at an arbitrary position. The main feature of this algorithm is to utilize the gradient information of a rotated barcode with a Sobel operator. The barcode area is extracted using the gradient information, and the barcode is decoded from the binary image of the extracted area. Theis algorithm is successfully applied to the 4 state and width modulated barcodes. It takes 0.86 secoden to process a letter, and the recognition rate reaches above 98% under various testing conditions. Since both the width and height modulated barcodes are processed with the proposed algorithm, it can be applied to postal service automation.