Abstract This paper presents a novel regenerative shock absorber that utilizes an arm-teeth mechanism to convert linear to rotational motion and to amplify the generator input speed. The flywheel of the arm-teeth mechanism also acts as an energy-storing element, allowing for smooth operation especially on a rough and uneven road surface. The critical parameters are identified through experiments and the simulation model is established based on a half-vehicle suspension system model. The novelty of this work is the proposed arm-teeth mechanism and the optimization of the half-vehicle suspension system through the Taguchi method. In this method, the ratio of the peak output power over the squared excitation displacement amplitude and the frequency bandwidth of the front and rear shock absorbers are set as targets and evaluated respectively. The effects of each parameter on the targets and the optimal parameter combinations are identified through the Taguchi matrix calculations. The optimized system is evaluated under the excitation of the road surface profiles of Class A, C and E of ISO 8606. It is found that the optimized system is able to harvest more energy with a broader frequency bandwidth than the original system at a certain speed for all three random road profile classifications.