Grey-level statistical models have been widely used in many applications for object location and identification. However, conventional models yield some problems in model refinement when training images are not properly aligned, and have difficulties for real-time recognition of arbitrarily rotated models. This paper presents improved grey-level statistical models that align training images using image or feature matching to overcome problems in model refinement of conventional models, and that enable real-time recognition of arbitrarily rotated objects using efficient hierarchical search methods. Edges or features extracted from a mean training image are used for accurate alignment of models in the search image. On the aligned position and orientation, fitness measure based on grey-level statistical models is computed for object recognition. It is demonstrated in various experiments in PCB inspection that proposed methods are superior to conventional methods in recognition accuracy and speed.