The presented work concerns the development of a novel measurement system for determining the instantaneous rotational speed of an engine with high accuracy. The developed system is mainly based on a commercially available optical sensor and appropriate data acquisition / post-processing procedure. The accuracy of the system is high; speed recording with a resolution of one degree of crank angle has been succeeded when measuring the speed of a one cylinder four stroke S.I. motored engine. The deduced experimental results were compared with the corresponding theoretical ones obtained by appropriate simulations, validating the proper functionality of the developed system. Furthermore, the system was also integrated into a typical four cylinder low power industrial engine successfully. Key-features of the proposed measurement configuration are accuracy, simplicity and low-cost suggesting numerous potential applications.