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This paper proposes an automatic road-sign recognition method based on image segmentation and joint transform correlation (JTC) with the integration of shape analysis. The presented system is universal, which is able to detect traffic signs of any countries with any color and any of the existing shapes (e.g., circular, rectangular, triangular, pentagonal, and octagonal) and is invariant to transformation (e.g., translation, rotation, scale, and occlusion). The main contributions of this paper are: 1) the formulation of two new criteria for analyzing different shapes using two basic geometric properties, 2) the recategorization of the rectangular signs into diamond or nondiamond shapes based on the inclination of the four sides with the ground and 3) the employment of the distortion-invariant fringe-adjusted JTC (FJTC) technique for recognition. There are three main stages in the proposed algorithm: 1) segmentation by clustering the pixels based on the color features to find the regions of interest (ROIs); 2) traffic-sign detection by using two novel shape classification criteria, i.e., the relationship between area and perimeter and the number of sides of a given shape; and 3) recognition of the road sign using FJTC to match the unknown signs with the known reference road signs stored in the database. Experimental results on real-life images show a high success rate and a very low false hit rate and demonstrate that the proposed framework is invariant to translation, rotation, scale, and partial occlusions.