Sensors are placed in the gear stick to measure the amount of perspiration on the driver's hand and odour detectors are fitted into the driver and passenger seats.
A monitoring system will also check to see if the car is staying inside its lane and a camera mounted at eye level scans the driver's eyes for signs of tiredness.
In the event of a driver being deemed unfit to drive, a warning will sound, car seat belts will tighten and in extreme cases the ignition will lock before the car is started.
Kazuhiro Doi, Nissan's general manager, said the car wouldn't be fooled by one of the passengers using their hands to bypass a sensor.
"We've placed odour detectors and a sweat sensor on the gear shift, but for example if the gear-shift sensor was bypassed by a passenger using it instead of the driver, the facial recognition system would be used," Doi told Reuters.
However, Doi said levels of impairment still had to be defined to make the system work.
"If you drink one beer, it's going to register, so we need to study what's the appropriate level for the system to activate," he said.
Nissan hopes the technology will help its efforts to cut the number of fatalities involving its vehicles to half 1995 levels by 2015.