A simple distortion-invariant optical identification (ID) tag is presented for real-time vehicle identification and verification. The proposed scheme is composed of image encryption, ID tag creation, image decryption, and optical correlation for verification. To create the ID tag, a binary-phase computer-generated hologram (BPCGH) of a symbol image representing a vehicle is created using a simulated annealing algorithm. The BPCGH is then encrypted using an XOR operation and enlargement transformed into polar coordinates. The resulting ID tag is then attached to the vehicle. As the BPCGH consists of only binary phase values, it is robust to external distortions. To identify and verify the vehicle, several reverse processes are required, such as capturing the ID tag with a camera, extracting the ID tag from the captured image, transformation of the ID tag into rectangular coordinates, decryption, an inverse Fourier transform, and correlation. Computer simulation and experimental results confirm that the proposed optical ID tag is secure and robust to such distortions as scaling, rotation, cropping (scratches), and random noise. The ID tag can also be easily implemented, as it consists of only binary phase components.