Video surveillance has long been in use to monitor security sensitive areas such as banks, department stores, highways, crowded public places and borders. The advance in computing power, availability of large-capacity storage devices and high speed network infrastructure paved the way for cheaper, multi sensor video surveillance systems. Traditionally, the video outputs are processed online by human operators and are usually saved to tapes for later use only after a forensic event. The increase in the number of cameras in ordinary surveillance systems overloaded both the human operators and the storage devices with high volumes of data and made it infeasible to ensure proper monitoring of sensitive areas for long times. In order to filter out redundant information generated by an array of cameras, and increase the response time to forensic events, assisting the human operators with identification of important events in video by the use of “smart” video surveillance systems has become a critical requirement. The making of video surveillance systems “smart” requires fast, reliable and robust algorithms for moving object detection, classification, tracking and activity analysis. In this thesis, a smart visual surveillance system with real-time moving object detection, classification and tracking capabilities is presented. The system operates on both color and gray scale video imagery from a stationary camera. It can handle object detection in indoor and outdoor environments and under changing illumination conditions. The classification algorithm makes use of the shape of the detected objects and temporal tracking results to successfully categorize objects into pre-defined classes like human, human group and vehicle. The system is also able to detect the natural phenomenon fire in various scenes reliably. The proposed tracking algorithm successfully tracks video objects even in full occlusion cases. In addition to these, some important needs of a robust smart video surveillance system such as removing shadows, detecting sudden illumination changes and distinguishing left/removed objects are met.