To increase the power density of the original generator, it is desired to boost the generator’s power to 1.2 times its original capacity. However, the cooling structure of the original generator cannot meet the heat dissipation requirements of the upgraded power level. It necessitates a redesign of the cooling structure. For the stator, water pipes through the stator core yoke are added; for the rotor, a novel rotor cooling structure is designed. The structure includes the groove bottom vent beneath the rotor excitation winding and the radial auxiliary grooves on the sides. The airflow passes through the groove bottom vent and then follows the radial auxiliary grooves until it reaches the air gap. It can efficiently remove the heat from the rotor excitation winding. The results of the new scheme are discussed. When comparing the new scheme with the original one, the highest temperature of the stator winding decreases by 20.6k, while the one of the rotor excitation winding does by 23.7K. To further improve the cooling structure, the Taguchi method is employed. The optimization variables include the area of the stator back vent, the number of radial auxiliary grooves, and the height of the groove bottom vent. The optimization objectives are the highest temperature of the stator winding, the highest temperature of the rotor excitation winding, the air friction loss, and the inlet-outlet static pressure difference. By analyzing the variance and range of the results, the improved scheme is obtained. Comparing the improved scheme with the new one, the temperature distribution difference between them is negligible. The improved scheme reduces the air frictional loss by 10.7%, but increases the inlet-outlet static pressure difference by 8.0%.