In this paper we present a wearable device for continuous monitoring of respiration signal and the associated algorithm for signal evaluations. The device took advantages of a proven respiratory inductive plethysmograph (RIP) technology and a wireless body sensor networks (BSN) development platform. The textile RIP sensor was integrated into a suit that could be comfortably worn around thorax or abdomen for monitoring respiration during sleep. A smart signal processing algorithm was implemented for extracting the dynamic respiration rate. The results of in-situ experiments from ten healthy subjects suggested that our system worked as intended. Due to the high reliability and low cost of our system it is believed to meet the future demands on home-based monitoring and diagnosis of sleep disorder-related diseases.