This paper presents a novel velocity estimation method for ground vehicles. The task here is to automatically estimate vehicle speed from video sequences acquired with a fixed mounted camera. The vehicle motion is detected and tracked along the frames using Lucas-Kanade algorithm. The distance traveled by the vehicle is calculated using the movement of the centroid over the frames and the speed of the vehicle is estimated. The average speed of cars is determined from various frames. The application is developed using MATLAB and SIMULINK.