Motion control process in modern automation technology and industry requires highly accurate speed information with high bandwidth. Incremental encoders are widely used as rotary feedback position and speed sensors which convert the motor position and speed information into coded electrical pulses. An accurate speed decoding system is therefore needed to extract necessary position and speed information from encoder output, which is further required by the motion control process. The level of accuracy and bandwidth highly depend on resolution of encoder being used as well as data processing technique. In this thesis, different incremental encoders and state-of-the-art speed decoding algorithms are discussed. These algorithms are implemented in Matlab Simulink and a comparative analysis is done based on accuracy, rapid response and wide speed range application. Further, the best choice is made based on this comparison and corresponding speed decoding algorithm is implemented in Xilinx FPGA. Analytical simulation results are presented in this thesis