This paper proposes an efficient optimization algorithm named chaotic teaching–learning algorithm (CTLA), to solve multimachine power system stabilizers design problem. The original teaching learning algorithm as competitive to other optimization algorithms, used two phases to proceed to the global optimal solution: ‘teacher phase’ and ‘learner phase’. However, during the second phase an adequate interaction between the teacher and the learners in entire search space are not guaranteed and the algorithm may be trapped in local optima. Thus, in the proposed CTLA a new phase named “chaotic phase” is added in order to overcome this drawback. The performance of the CTLA is investigated by using a set of benchmark functions. To demonstrate the effectiveness of the proposed algorithm in power systems, the conventional lead-lag power system stabilizers (PSSs) are tuned for: three machines nine bus system (WSCC) and the ten machine thirty-nine bus New England power systems. The performance of the proposed CTLA-based PSS (CTLAPSSs) under different loading conditions and disturbances is investigated through eigen-value analysis, non-linear time domain-simulations and some performance indices.