Design optimization can influence the achievement of management goals and the sustainable development of EPC (engineering–procurement–construction) projects. Current research regarding engineering design optimization mainly focuses on the technology aspect, while lacking extensive attention regarding the factors influencing stakeholders’ participation in design optimization of EPC projects. Based on the existing literature and expert opinions, this study identifies 33 critical influencing factors and adopts the DEMATEL (decision-making trial and evaluation laboratory) and ISM (interpretive structural model) method to analyze the hierarchical structure and interrelationships among these factors. The results show that the factors, including subcontractors’ participation during the design, design management level, performance evaluation mechanism, technological development, owners’ attitude towards disputes, and sensitivity to project cost growth, play critical roles in multi-stakeholders’ participation in design optimization of EPC projects. All these factors can be divided into causal factors (13) and result factors (20) and a hierarchical structure model is developed for the whole system, composed of three types of influencing factors, that is, the surface direct factor, intermediate indirect factor, and deep-rooted factor. The findings of this study can help managers to have a better understanding of design optimization of EPC projects from the stakeholder perspective and help managers to take effective measures to improve the status quo as well as facilitate the sustainable development of this kind of project.