In recent years, developing Indoor Positioning System (IPS) has become an attractive research topic due to the increasing demands on Location-Based Service (LBS) in indoor environment. Several advantages of Radio Frequency Identification (RFID) Technology, such as anti-interference, small, light and portable size of RFID tags, and its unique identification of different objects, make it superior to other wireless communication technologies for indoor positioning. However, certain drawbacks of existing RFID-based IPSs, such as high cost of RFID readers and active tags, as well as heavy dependence on the density of reference tags to provide the LBS, largely limit the application of RFID-based IPS. In order to overcome these drawbacks, we develop a cost-efficient RFID-based IPS by using cheaper active RFID tags and sensors. Furthermore, we also proposed three localization algorithms: Weighted Path Loss (WPL), Extreme Learning Machine (ELM) and integrated WPL-ELM. WPL is a centralized model-based approach which does not require any reference tags and provides accurate location estimation of the target effectively. ELM is a machine learning fingerprinting-based localization algorithm which can provide higher localization accuracy than other existing fingerprinting-based approaches. The integrated WPL-ELM approach combines the fast estimation of WPL and the high localization accuracy of ELM. Based on the experimental results, this integrated approach provides a higher localization efficiency and accuracy than existing approaches, e.g., the LANDMARC approach and the support vector machine for regression (SVR) approach.