An effort has been initiated to develop a portable system capable of measuring the magnetic signature of a surface ship. The system will employ a formation of multiple AUVs, each equipped with a magnetometer. The objective is to measure total magnetic field at specified locations relative to the surface ship. In the first step of system development, an Autonomous Underwater Vehicle (AUV) has been equipped with a tri-axial fluxgate magnetometer and used to perform preliminary magnetic field measurements. Measurements of this type will be used to calibrate an individual AUV/magnetometer system. Initial measurements appear to meet necessary measurement requirements on noise floor as the standard deviation of the indicated total magnetic field was observed to be 21nT while the AUV proceeded on a straight, level path. Extended Kalman Filters (EKF) are being developed for on-board AUV navigation and post-processing a best estimate for AUV vehicle position. Navigation experiments were conducted to evaluate AUV navigation and position estimation. In these experiments, an independent high-accuracy topside-track system was used to provide groud-truth for comparison. The average error in the on-board estimated position of the AUV used for navigation was 1.84m. The post processing EKF was designed to use all available sensor data. This EKF had an average position error of 0.74m when compared to the ground-truth. Overall, the AUV was able to navigate to an average distance of 1.95m from its desired waypoint track.