This paper presents Computer Aided Architectural Design (CAAD) system utilizing the technologies of artificial intelligence (AI) and image processing. The goal is to create a CAAD system that detects buildings from satellite images and produces computer city models allowing the system’s users to manipulate the models utilizing machine learning technology. The flexibility and usability of the system was evaluated with case studies. Soft computing technologies including neural networks and fuzzy systems are mainly applied and tested as the system’s methodology.