Power skiving is a highly productive method for manufacturing gears, especially internal gears. However, due to the resharpening errors of the conical skiving tool, the insufficient tool life hinders the large-scale applications of power skiving. This work proposes a novel design method of the cylindrical skiving tool based on deriving the mathematical model of two-parameters conjugate tooth surface of an internal gear. The error-free cutting-edge of the skiving tool is obtained from the intersection curve of the conjugate tooth surface and the rake face with an offset along the tool axis. In the present study, a helical internal gear with 97 teeth, module of 1.5875 mm and helix angle of 23.5° is used for the design of a cylindrical skiving tool with 37 teeth. The numerical analysis results show that the tool axial offset zoff, crossed shaft angle Σ and geometric rake angle of tool γ0 result in the asymmetrical tool profile and the uneven clearance angles on both flanks. However, the change of the tool helix angle by 0.7° can obtain an even clearance angles on both flanks when zoff is −30 mm. The noninterference height of the cylindrical tool is 48 % more than the conical tool when machining the same workpiece, which means the cylindrical tool is expected to be a longer tool life. Experiments are conducted on a Profilator Type H skiving machine by using the cylindrical skiving tool by the accuracy of DIN 3. The results show the tool design method is effective and applicable to machine a gear by the accuracy of ISO1328-1 level 7.