This paper presents the development of ultrasonic based engine oil condition monitoring system. The developed system will qualitatively detect the deterioration in the engine oil quality due to the dissolved impurities developed over its usage in the engine. The test set up consists of an ultrasonic sensor interfaced with the Arduino Uno microcontroller board that is placed at a fixed height over the beaker in which different samples of engine oil at constant volume are taken. The deterioration of engine oil is quantitatively analyzed by measuring the distance travelled by the ultrasonic waves in different samples of engine oil. The samples of engine oil is collected over its usage with the distance covered by the automobile. Using test bed the distance travelled by the ultrasonic wave is monitored for different samples of engine oil. It is experimentally verified from the test set-up that the concentration of dissolved impurities in the oil is inversely proportional to the distance covered by ultrasonic waves. As the distance measured below the threshold value, which is proportional to high concentration of impurities in engine oil, it is concluded that the condition of oil is poor and needs to be replaced by the pristine engine oil. Therefore, the developed system will aid in increasing the useful life of automobile engine. Furthermore, the same set-up can also be used to benchmark the quality of engine oil provided by different manufacturers.