This paper presents an automatic lumbar spine level identification system based on image processing of ultrasound images. The goal is to aid anesthetists in identifying the correct spinal level during epidural anesthesia. Spine level identification is initiated by detecting the location of the sacrum using a classifier based on a support vector machine. Image stitching is then conducted to produce a panorama image of the spinal area. During this process, the location of spinal processes are enhanced using a Gabor filter and detected through template matching. The locations of the spinal processes are tracked and used as an overlay on the ultrasound image in real-time. The system then informs the anesthetists when the correct spinal level has been reached. The system was evaluated on forty volunteers by two anesthetists with varying experience level and was able to detect the correct position of the L3-L4 spinal level in all of the volunteers. The average time taken to produce the location of the L3-L4 spinal level was 30.92 seconds. The results show that the system can quickly and accurately detect the location of the target spinal level. © 2017 IEEE.