This paper presents a laboratory evaluation of a novel optical sensing system mounted on a moving platform for detecting the presence and adequacy of Top-of-Rail (TOR) friction modifiers and flange greases. The friction modifiers are applied on the top of rail for managing the coefficient of friction to reduce wear while maintaining stable traction. Flange greases are intended to reduce wear that happens when wheel flange makes contact with the rail gage-face during curving. Additionally, friction modifiers and flange greases could influence fuel consumption. The U.S. railroads have made the application of TOR adopted on the mainlines. The tools, however, for evaluating the rail lubricity condition are limited and there is often uncertainty about the required or “optimal” amount of friction modifiers, except for the trained eye of the track engineer. The proposed sensing system provides an innovative non-contact method by using the optical laser’s reflective and scattering properties when directed at the rail surface to assess the friction modifiers’ conditions. In addition, the laser’s near-UV (Ultraviolet) wavelength is able to excite fluorescent elements in the flange grease and detect any top-of-rail contamination of grease that may exist. The design and working principles of the system are demonstrated and explained in this paper. Static and dynamic tests are performed in the lab under a controlled environment for various lubricity conditions, in order to experimentally validate and evaluate the performance of the optical sensing system. The lab evaluation indicates that the proposed optical sensing system is capable of successfully detecting the diverse lubricity conditions and shows a great potential to be widely tested and used in the field on revenue-service tracks.