Particulate contamination of hydraulic fluids is one of the major causes of mechanical wear of hydraulic components resulting in system inefficiency and failure. Potential failures of hydraulic systems could be avoided through continuously monitoring the condition of the fluid. A practical contaminant sensor was developed to estimate the level of particulate contamination in hydraulic fluids. The sensor was designed to be installed on vehicle and provide in-line measurements of contaminated hydraulic fluid. The sensor used dielectric spectroscopy for measuring contaminants. To investigate the performance of the dielectric sensor two tests were performed with different diameter central rods using iron particles as hydraulic contaminants. A hydraulic test circuit was built and a methodology was developed for the tests. An eight-channel particle counter was used for calibration of the dielectric sensor. PLS models were developed to investigate the relationship between dielectric spectra and iron particle counts. The RMSEC and RMSECV for the sensor with a central rod diameter of 6.35 mm were 1.1ISO 4406 scale numbers and 1.39 scale numbers respectively. For a 17.7 mm diameter rod, the respective values were 0.62 and 0.77. The sensor shows good potential estimate of the cleanliness level of hydraulic fluid mixed with iron contaminants.