A channel letter lighting system according to the present invention comprising a channel letter housing with a translucent channel letter cover. A plurality of electrically connected lighting units are mounted to the channel letter housing and conductors provide an electrical signal to each of the units. Each of the units comprises a lighting unit housing and a printed circuit board (PCB) mounted within said housing. The PCB has a plurality of light emitting elements, such as light emitting diodes, with the electrical signal applied to the light emitting elements causing them to generate light substantially away from the housing. The PCB conducts and dissipates heat from the light emitting elements, the unit further comprises a space between most of the PCB and the lighting unit housing to allow heat from the PCB to dissipate into the surrounding ambient. A mounting mechanism is included for each unit to the channel letter housing.