Pipeline defects and oil leakages pose an enormous challenge especially in the oil and gas industries, hence, the need for an effective and economical pipeline inspection system. This work focused on the development of a cost effective In-Line-Inspection tool called a smart pipe inspection gauge (PIG). A Test bed was designed and developed to simulate the impulses experienced by the PIG as it moved along the pipeline. The electronics and sensors embedded in the smart PIG were designed to detect vibrations as it moved along the pipe wall and allowed for the wireless transmission of data collected by the PIG system. The results obtained from the laboratory tests revealed dramatic changes in the vibrational intensity experienced by the smart PIG at various intervals. This validates the use of off-the-shelf sensing equipment with a low cost assembly to detect defects in pipelines.