This study proposes a novel microfluidic system based on a computer controlled digital image processing (DIP) technique and optical tweezers for automatic cell/microparticle recognition, counting and sorting in a continuous flow environment. In the proposed system, the cells/microparticles are focused electrokinetically into a narrow sample stream and are then driven through the region of interest (ROI), where they are recognized and traced in real time using a proprietary DIP system. Synchronized control signals generated by the DIP system are then used to actuate a focused IR laser beam to displace the target cells from the main sample stream into a neighboring sheath flow, which carries them to a downstream collection channel where they are automatically counted. The proposed approach makes possible the continuous sorting and counting of cell samples without the need for any moving parts or embedded transducers. The experimental results show that the proposed system is capable of sorting 5 £gm or 10 £gm PS bead from a mixture of 5 £gm and 10 £gm samples in the flow speed 300 £gm/sec. The proposed system provides a simple, low-cost, high-performance solution for cell manipulation in microfluidic devices.