Space Applications Centre develops various electro-optical (EO) sensors for space borne platforms and inter-planetary missions. Sensor complexities vary for different applications and therefore performance evaluation and characterization pose different challenges. Performance optimization tasks demand repeated measurements and characterization needs to be done under different phases of testing. It is difficult to meet such requirements in case of short sensor development lifecycles or tight schedules. Activities which are amenable to automation are identified and targeted to reduce the manual intervention and to avoid delays due to errors and to speed up the overall activity. <p> </p>Laboratory instruments, either in-house developed or COTS, play an important role in automating the test setup as they have different types of interfaces and have their own complications. In order to make an automated test setup, software intelligence need to be built based on the instrument feedback and the other check points based on the test sequence. A complete automation needs machine intelligence and sufficient amount of traceability, so that the process can be easily verified for confidence. Overall software architecture should be such that it allows connecting various types of instruments, decision making based on output of the device under test, complete traceability and fault tolerance. <p> </p>In this paper authors have identified the activities that can be automated for various EO sensor categories and approaches are discussed for automation with radiometric calibration, spectral response measurement and focusing as test cases. Also, software architecture is presented which allows uniform access to instruments, back-end database and macro level automation process.