RC5 is a protocol used in remote controllers. Remote controllers are often tested with a simple IR detector which can only tell us if data is transmitting or not. But it is hard to tell if the correct data is transmitting. For that purpose an RC5 decoder is needed. The system consists of an 8051 microcontroller and a TSOP sensor. The sensor can detect modulated IR waves modulated at 38khz carrier but cannot decode the data. So the sensor output is given to the microcontroller which is programmed with necessary timing aspects to decode the data. The controller analyses the wave with the time reference given and stores each bit of data and combines them in to a byte. This value is then converted to ASCII and is displayed on the LCD. Thereby we can identify which key is pressed. The system can also act as a remote controlled switch with the help of a relay mounted on the board. When the power key in the board is pressed the relay turns on.