This paper outlines the University's involvement with Industry based manufacturing projects, and how this has lead to the recent establishment of postgraduate and undergraduate Mechatronics degrees. The nature of the industrial projects w i l l be described with examples of specific problems, test equipment and experimental rigs given. This work will be used to explain the reasons for the design of the mechatronics courses at Wollongong. A new teaching methodology particularly suitable for mechatronc's education is also discussed.