This paper presents the design and implementation of a new automatic test equipment (ATE) for digital circuits based on the signature analysis. This testing system approach is designed to apply the test pattern generated either by a pseudorandom test pattern generator (PRTPG) or by a deterministic test pattern generator (DTPG) to the circuit under test (CUT). The response of the CUT is compacted by signature analyzer. The generated signature is automatically transferred to the personal computer (PC) through the parallel port of the personal computer (PC). This signature is stored on a file and displayed on the screen of the PC. The timing controller card and the control port of the parallel port generate all control signals to control all steps of the test cycle for proper operation. The PC equipped with a software part. It is designed to receive the signature automatically. Good signatures are generated from the good CUT and the measured signatures are generated from the CUT. Determination of whether the measured signature is good or bad is then made by comparing with those of the golden unit. Bad signatures are then traced back to locate the source of the fault.