The project is aimed to design an industrial automation system by using wireless communication technology of ZIGBEE using which the fluid level in the tank can be monitored and controlled. ZIGBEE is a specification for a suite of high level communication protocols using small, low-power digital radios based on the IEEE 802.15.4-2003 standard for Low-Rate Wireless Personal Area Networks (LR-WPANs). ZIGBEE is targeted at radio-frequency (RF) applications that require a low data rate, long battery life, and secure networking. ZIGBEE protocols are intended for use in embedded applications requiring low data rates and low power consumption. ZIGBEEs current focus is to define a general-purpose, inexpensive, self-organizing mesh network that can be used for industrial control, embedded sensing, medical data collection, smoke and intruder warning, building automation, home automation, etc. The resulting network will use very small amounts of power. The project is designed in such a way that we will interface three water level sensors to an 8 bit microcontroller 8051, on the transmitter side. Three water level sensors will be arranged at 3 different levels of the tank. And an XBEE transceiver will also be interfaced to the controller to transmit the status of the sensor. On the receiver side another XBEE transceiver will be interfaced to the controller to receive the data transmitted by the transmitter. The received data will be fed to the controller and by monitoring the data it will perform the predefined task i.e. for levels 1&2 the pumping motor will be turned ON and for level 3 it will be turned OFF through relay. An LCD will also be interfaced to the controller to display the status of the sensors. This project uses regulated 5V, 500mA power supply. Unregulated 12V DC is used for relay. 7805 three terminal voltage regulator is used for voltage regulation. Full wave bridge rectifier is used to rectify the ac output of secondary of 230/12V step down transformer.