The present work describes the development of an automatic control system and the investigation of the flight dynamics of fixed-wing micro air vehicles (MAVs) with vertical take-off and landing (VTOL) capabilities. Specifically, the hovering phase of the flight was studied in detail. A state-space model was formulated and used in a control law design. The effects of propeller slip stream impinging on the airframe are discussed in the context of control design. Feedback control laws based on a proportional, integral, and derivative (PID) control design were developed and programmed into the autopilot. The development and evaluation of two VTOL MAVs with wingspans of 65 and 31 cm are presented. A number of test flights of vehicles with attitude stabilization and altitude hold were conducted with telemetry acquisition. Despite the difference in size, similarities were noted in the dynamic response for both aircraft. The actuation delays in the propulsion systems caused a systematic error in an altitude. Average amplitudes of rotational oscillations in all three axes were also about the same for both aircraft. Higher roll rates can be explained by lower inertia in roll axis.