The principles of the Surface Mount Technology (SMT) product character segmentation and its technology could be described as following: SMT product character image is obtained by image sampling equipment and its ideal binary images is got after image processing. In order to segment the SMT product character effectively, a novel character segmentation algorithm is proposed based on contour feature. Three kinds of information are extracted, one is the up contour feature, another is the under contour feature, the third is the width and the height of the image. Then the position of character segmentation is determined according to the width and height of single character, and character segmentation can be accomplish according to its up contour feature and under contour feature. By analyzing the test result, the proposed approach has excellent properties in character segmentation.