As the positioning technology is becoming more advanced, people’s demands increase progressively on the indoor positioning system, since Global Positioning System (GPS) already cannot meet these demands. In order to solve the problem of accuracy and stability of the indoor positioning system, an indoor positioning system which is based on Radio Frequency Identification Devices (RFID) has been developed rapidly. In this project we propose to design an indoor positioning system based on RFID, and make the system on purpose of guaranteeing the rapid response and accurate positioning so as to achieve a low cost and low energy consumption. We combine the features of RFID and ultrasonic system together in an effort to complete the indoor localization. This system is divided into two modules: one is RFID identity module and the other is ultrasonic positioning module. The RFID identity module depends on RFID’s rapid response ability and it is widely covered to the recognized targets. The ultrasonic positioning module by receiving ultrasonic signal measures the target distance and sends the results to the microprocessor to implement the positioning. This thesis also describes the hybrid indoor positioning system structure. It presents the influence of different ultrasonic sensors on the ultrasonic positioning module and the test results for the prototype of ultrasonic range finder module. Meanwhile the test results and the accuracy of positioning are also analyzed in this thesis.