Contamination of compressed air can reduce its utility and lead to costly failure of pneumatic components. Monitoring the presence of contaminants in the air could provide early warning to take measures that could retain pneumatic system usefulness. The sensing of contaminants in a compressed air stream using dielectric spectroscopy has good potential for a viable commercial sensor for pneumatic systems based on the differences in dielectric properties between air and common contaminants such as metal, silicon, and water condensate. Oil mist, while not a contaminant, is required for lubricating pneumatic components, so its presence is important. Two tests were performed using a dielectric sensor capable of spectroscopic measurement to investigate the efficacy of dielectric spectroscopy in detecting the presence of liquids (water and oil) in compressed air. The first test used deionized water, and the second test used a light lubricant oil (Sunoco Sunvis 932, Sunoco, PA). Industrial spray nozzles were used to atomize these liquids, which were then entrained in a compressed airstream and passed through the dielectric sensor. Visualization of spectroscopic measurements and their transformation using principal component analysis (PCA) showed that the sensor has potential to differentiate the presence and absence of liquid droplets in compressed airstream. This separation of two cases based on the spectroscopic data suggests that dielectric spectroscopy could be used to detect these two liquids in the compressed airstream.