A coin identification system and method is disclosed for determining the identity of a source coin by way of image processing. The system comprises a source coin image capture means, an image processing means, and an output that relays information to the user or sorts the coin according to its match results. The processing means compares at least one image of the source coin to a plurality of reference coin images, whereby the image of the source coin is manipulated and overlaid onto the reference coin images to determine if a match is available with a given probability. An embodiment of the system employs a coin collection and sorting device. Another embodiment contemplates a handheld electronic device that captures and processes the source coin. Both embodiments may connect to a remote server housing the reference coin information or store the information locally.