Passive acoustic systems composed of hydrophone array have been shown useful for underwater acoustic source detection and tracking. The work presented here demonstrates use of a passive acoustic system for an Autonomous Underwater Vehicle (AUV) composed of a 2D hydrophone array along with a post processing algorithm for real time detection and tracking of surface vessels. Important design decisions for development of the hydrophone array are taken based on different factors such as the frequency range of broadband surface vessel noise, review of literature, financial as well as structural constraints of the AUV. The post-processing algorithm, developed using a phased array principle called acoustic beamforming, outputs real-time heading angles of the target surface vessels. Initial measurements conducted at Claytor Lake with the developed passive acoustic system to locate a white noise acoustic source showed better performance with functional beamforming technique among others. Various hydrophone array configurations are tested during these measurements to determine the optimal hydrophone placement. Furthermore, field tests are conducted at Norfolk Bay area to assess the performance of the developed system to real time detect and track surface vessels of different sizes in mission relevant environment. Cross-spectral matrix subtraction approach to subtract AUV's self noise is investigated to improve signal range and thus the detection range of these different surface vessels. This approach showed improvement in detection range of up to 350%. Another set of measurements again at Claytor Lake demonstrates real time detection and tracking of a small boat using an AUV integrated with the developed passive acoustic system operating at different propeller conditions. Results showed that low signal to noise ratio at higher AUV propeller rpm makes the detection and tracking difficult limiting the operating AUV propeller rpm up to 1500. This work also explores custom build hydrophones based on piezoelectric material of different shapes and sized to replace the expensive industry purchased hydrophones to lower the cost of developed system. / Master of Science / In field of underwater acoustic, hydrophone arrays have gained popularity for the detection and tracking of sound sources by just listening to them. This study presents design, development and testing of such hydrophone array attached to an AUV for real time detection and tracking of surface vessels. Multiple hydrophones in an array collect the underwater noise radiated by the target surface vessel which are essentially the unsteady pressure fluctuations. The phase difference between signals acquired by different hydrophones is then used to predict the direction of arrival of a sound wave from the target ship. Such a phased array principle called acoustic beamforming is used to develop a post processing algorithm which takes hydrophone array signals as input and outputs the heading angle of the target ship. This work first demonstrates capability of the developed hydrophone array and the algorithm to detect a white noise acoustic source (speaker) placed inside water at Claytor Lake. These measurements investigated performance of different acoustic beamforming techniques as well as different hydrophone array configurations. Furthermore, measurements conducted with actual surface vessel at Norfolk Bay area proved capability of the developed hydrophone array and the algorithm to detect and track ships in real time. The performance of the hydrophone array is characterized in terms of detection range and was observed to improve by 350% when the AUV's self noise is removed from the acquired hydrophone signals. Combined single unit of AUV and developed hydrophone array system also demonstrated real time detection and tracking of a small boat at Claytor Lake for different AUV operating conditions. Moreover, custom build hydrophones manufactured using piezoelectric material are found to be a feasible replacement for the expensive industry purchased hydrophones in order to reduce cost of the array.