A microcomputer-based real-time programmable optical signal processing system utilizing a Magneto-Optic Spatial Light Modulator (MOSLM) and a Liquid Crystal Light Valve (LCLV) is described. This system can perform a myriad of complicated optical operations, such as image correlation, image subtraction, matrix multiplication and many others. The important assets of this proposed system must be the programmability and the capability of real-time addressing. The design specification and the progress toward practical implementation of this proposed system are discussed. Some preliminary experimental demonstrations are conducted. The feasible applications of this proposed system to image correlation for optical pattern recognition, image subtraction for IC chip inspection and matrix multiplication for optical computing are demonstrated.