This paper describes procedures for the design, implementation and in-orbit verification of an advanced Attitude and Orbit Control System (AOCS) that can be applied to micro-satellites. Functional requirements imposed on AOCS are becoming severer as the mission becomes more complicated and challenging even though onboard resources are limited in micro-satellites. In addition, many verification steps must be taken for the system design, implementation, and in-orbit demonstration. In this study, an advanced AOCS design that is optimized for the mission of the artificial meteor demonstration satellite 'ALE-2' is proposed. This paper presents three AOCS features that are specialized to ALE-2 but applicable to other micro-satellites: sensor calibration technique, attitude and gyroscope bias estimation using extended Kalman filter, and orbit control by small propulsion system. These functions were implemented using a hardware-in-the-loop simulator environment, allowing for quick and efficient ground evaluation. In addition, in-orbit demonstration of the proposed AOCS was performed after the launch of ALE-2. Through these verification process, it was confirmed that the AOCS functions required for the mission of ALE-2 were properly implemented and worked in orbit.