The paper deals with development of a mathematical model of a hydraulic system. A three tank laboratory model (Amira DTS200) was investigated, its characteristics were measured and a process of evaluation of obtained data is described in detail. Although the three tank system is a classical modelling task described in many publications, this papers focuses on nonlinearities which are present in real system and other differences between ideal mathematical model and real-time system. Particular attention is paid to characteristics of the valves of the system. The valves contain hysteresis and other nonlinearities. Despite the fact that all valves the system is equipped with are of the same type, big differences were observed between their characteristics. The used modelling approach is not restricted to the particular system but can be used for many real-time hydraulic systems.