An inductive sensor system is proposed to detect the gear location and angular position of a geared shaft for automatic feeding of the shaft into the proper cutting position of the other end. The system consists of two set of coils, bridge circuit, signal condition circuit, and microprocessor. The coil sensors of the system measure changes of inductance along with the surface position of a geared shaft. The inductance changes are transformed to voltages by the bridge circuit, which are then conditioned and processed for the recognition of the gear. In order to incorporate with the experimental results with the sensor system, a finite element method (FEM) simulation for the magnetic field between the sensor and the shaft was carried out. The predicted results and the experiments revealed that the sensor system was appropriate for sensing the position of gear and the angular position of gear tooth of a geared shaft.