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Radio frequency identification (RFID) systems are expanding rapidly with their applications in a wide range of areas. RFID systems consist of RFID tags and RFID readers or interrogators. RFID tags are small, wireless devices that help identify objects and people. Even though RFID system is widely useful for industrial and individual applications, RFID tag has a serious privacy problem, i.e., traceability. To protect users from tracing, we proposed a hardware implementation of RFID with secure mutual authentication protocol. The proposed system was simulated using ISE simulator and synthesized using Xilinx synthesis technology. The system has been successfully implemented in hardware using field programmable gate array (FPGA) and microcontroller.