Magnetic non-destructive testing methods can be classified into the earliest methods developed for assessment of steel constructions. One of them is the magnetic flux leakage technology. A measurement of the magnetic flux leakage is quite commonly used for examination of large objects such as tanks and pipelines. Construction of a magnetic flux leakage tool is relatively simple, but a quantitative analysis of recorded data is a difficult task. Therefore, methods of magnetic flux leakage signal processing and analysis are still under development. A magnetic flux leakage in-line-inspection tool called FLUMAG 500 was constructed. FLUMAG 500 was designed for gas and oil pipelines inspection. In this paper principle of operation of FLUMAG 500 was described. Advanced algorithms of the signal processing and analysis was also developed. Results coming from the development stage as well as from the final construction of the tool were presented. Analysis of these results shows that FLUMAG 500 is a suitable tool for detection of corrosion defects in a pipeline wall.