Embedded system design is characterized by its complexity day by day, combined with reduced time-to-market deadlines. An embedded system integrates together a hardware and software parts on a common platform.The Advanced Encryption Standard (AES) is a cryptographic algorithm that can be used to encrypt a huge bulk of data and for embedded system security. This paper, explains the characteristics of leon3 Soft Core processor, and its implementation on FPGA board. We have implemented AES algorithm for both encryption/decryption by using C language and leon3 processor. The algorithm is implemented with different key of 128, 192 and 256 bit length. Our proposed software implementation is very efficient for encryption/ decryption functions in leon3 embedded processor. It can be used in low cost applications.