A microcontroller based system using 89c51 microcontroller for the measurement of dielectric constant in liquids has been designed and developed. It is based on the principle that the change in frequency of an XR-2206 function generator, when the liquid forms the dielectric medium of the dielectric cell, is measured with a microcontroller. Atmel's AT89C51 microcontroller is used in the present study. Further, an LCD module is interfaced with the microcontroller in 4-bit mode, which reduces the hardware complexity. Software is developed in C using Ride's C-cross compiler. The instrument system covers a wide range of dielectric constants for various liquids at various concentrations and at different temperatures. The system is quite successful in the measurement of dielectric constant in liquids with an accuracy of±0.2%. The paper deals with the hardware and software details.