This paper presents the design and development of a virtual instrument for the measurement of haemo-dynamic parameters namely, pulse rate and oxygen saturation in arterial blood based on the popular photoplethysmographic (PPG) principle. A clip-on sensor, housing red and infrared (IR) light emitting diodes and suitable photo detectors is developed. The sensor is interfaced to a PC utilizing the audio channel of the sound card, thus dispensing with expensive analog to digital converter hardware. Since the frequency response of the audio channel is not suitable for the PPG waveforms of red and IR, FM modulation and demodulation are employed. An empirical relationship is developed for the computation of the oxygen saturation in arterial blood using the red and IR PPG data and the well-known and well-established extinction coefficients of haemoglobin with and without oxygen. Data acquisition and processing are accomplished under LabVIEW virtual environment.