The theory and application of RGB-LED based mixed-color illumination system for use in machine vision and optical microscopy systems are presented. For machine vision system, relationship of various color sources and output image sharpness is discussed. From the viewpoint of gray scale images, evaluation and optimization methods of optimal illumination for machine vision are concluded. The image quality under monochromatic and mixed color illumination is compared. For optical microscopy system, demand of light source is introduced and design thoughts of RGB-LED based mixed-color illumination system are concluded. The problems need to be solved in this field are pointed out.