Micro-unmanned aerial rotorcraft are quickly gaining acceptance as indoor platforms for performing stealth, surveillance, and rescue and reconnaissance missions. These rotorcraft are generally required to operate in cluttered, unknown, and dynamic GPS-denied environments, which present threats to the safe operation of the vehicle. To overcome these environmental challenges, we describe a system that is capable of localizing itself by producing accurate odometry estimates that can detect and track moving objects and avoid collisions with obstacles while following a moving target using a laser range finder. Our system has been implemented in the Simulink environment in MATLAB. Various simulations have shown our methods to work well, even in the presence of sensor noise and out-of-plane motion. Our system is capable of localizing itself within ±20 mm in North and East and ±0.5 degrees in ψ while detecting and tracking