An on-line oil monitoring system offers a suitable solution to the practical problems encountered in monitoring the conditions of machinery equipment. The objective of this paper is to present a systematic method for analysing wear particles in the lubricant used in a diesel engine, in a laboratory setting. An integrated on-line oil monitoring system, which combines an inductive transducer with a fibre optic transducer, was developed to primitive design stage and some experiments have been done. The inductance transducer, whose operation is based on an inductive measurement technique, can detect large ferrous and non-ferrous wear debris. A particle's material properties reflect its origin, and the frequency can be used for estimating wear particle size. The fibre optic transducer can detect small particles and is used for inspection of oil contamination levels. The integrated system combines the virtues of two measurement methods, extends the detection range and meaningfully improves the reliability of oil monitoring. So it has great promise and there are prospects for application as soon as the solutions to certain problems are found.