The authors present a security-enhanced UHF RFID (radio-frequency identification) transponder with novel demodulator. The demodulator, which takes advantage of the rectifier’s first stage as the envelop detector, dosen’t need a separate envelop detector. A novel average detector is also designed, which generates an output voltage having large voltage difference with the envelop signal, making the design demand for the comparator less rigorous. Because the DC level of the envelop signals can vary significantly with the distance between transponder and reader, the comparator is designed to have rail-to-rail common mode input range. To ensure a security communication between transponder and reader, a 128-bit advanced encryption standard (AES) algorithm is employed in the baseband processor. The whole transponder chip is implemented in 0.18μm CMOS process with a die size of 880μm × 950μm. Measurement results show that the minimum input RF signal that can be demodulated is 100 mV and the maximum input data rate is 160 kb/s.