Number Plate Recognition identifies vehicle number without human intervention. It is a computer vision application and it has many important applications. The proposed system consists of two parts: number plate area extraction and character identification. In this paper, morphological operation-based approach is presented for number plate area extraction. Effective segmentation of characters is done after plate area extraction. Histogram-based character segmentation is a simple and efficient technique used for segmentation. Template matching approach is used for character extraction. Number plate with variable character length poses limitation on number identification in earlier reported literature. This is taken care of using histogram-based character segmentation method.