Road accidents are a major factor for deaths world wide and recent studies show that driver fatigue is a key factor for road accidents. Drivers tend to drive vehicles even if they are extremely tired and due to this, there is chance of them falling asleep at the wheel which results in accidents causing major loss to precious human life & property. This implies there is a need for a driver alert system which monitors the driver’s wakefulness and gives an alarm. This paper proposes a novel technique to determine sleep stages by considering the available EEG Signals of the subject, calculate its FFT and determine the power spectrum. Using this we then plot the hypnogram from which the wakefulness and sleep stages can be determined and if the driver is found to move from a state of wakefulness to sleep stage, immediately an alarm is provided. This concept can be enhanced for real time application with hardware realization and thus helps to reduce road accidents to a great extent.