The sloth bear (Melursus ursinus) is a threatened species endemic to the Indian subcontinent. To date, no reliable method has been developed for identifying individuals or monitoring their populations. Here we describe a non-invasive genetic monitoring technique for individual identification of sloth bears. After testing 18 microsatellites developed for other carnivore species, including ursids, we optimized a panel of 7 highly polymorphic microsatellite loci that yielded a cumulative Probability of Identity between siblings value of 2.15E-03. We used this panel to identify 55 individual sloth bears from 190 fecal and 4 hair samples collected in tiger reserves in central India. This panel can be used for population genetic studies and population monitoring of sloth bears.