This paper presents a novel system for vehicle collision avoidance based on microcontroller which will be very effective for reducing accidents. In order to develop automobile collision avoidance system, the vehicles involved should be able to exchange the information in real time. The system adopts ultrasonic sensor and light intensity meter to monitor the distance of approaching vehicle. Based on simulation and tests conducted a light intensity threshold is set. Upon exceeding this threshold, the device triggers the relay which in turn dips the headlights of vehicles involved. Apart from this, it will have a life saving capability. The system is also equipped with GSM and GPS modules. In case the collision occurs, then the exact location of collision will be sent by GPS to the stored numbers through GSM circuit, so that medical care is attended in short time.