Automated Guided Vehicles are used to help the process of carrying materials from one place to another. AGVs are widely used in the materials handling process in different industries hence, the reasoning behind their extremely wide usage in industries such as Automotive, manufacturing, Medical, etc. This research deals with the obstacle avoidance of Automated Guided Vehicles (AGV). This paper propose an algorithm that helps to build obstacle-free trajectories for AGV that leave the original track and again get back to the original track by avoiding the obstacle. The new path also have to act according to the dynamic & kinematic constraints of the AGV. The proposed method will be validated using simulations.