This paper describes the use of a parameter optimization method for the design of hydraulic servos. These servos are employed in a two-dimensional contouring control system for a machine tool. The design actually is carried out by adjusting five parameters (gains, time constants) of the servo using a hill-climbing procedure. A physical description and a mathematical model of the hydraulic servo and the associated machine tool are presented. This model includes the amplifiers, stability networks, valves, and hydraulic motor of the servo itself, as well as the inertia, viscous friction, backlash, spring effect, and coulomb friction of the machine tool. Also discussed are the important performance requirements arising from the desire for accurate machining of complex shapes. These requirements stipulate the need for small path errors along the contour and smaller overshoots than undershoots at corners. They are translated into a meaningful performance index, the value of which is to be minimized by the parameter optimization method. The digital computer program and the optimization procedure for the five free servo parameters are discussed. Finally, the path error along a test contour is presented for both the starting and optimum values of the five adjustable parameters. These data indicate clearly the improvement in performance which can be achieved over a servo design carried out by a conventional design method.