In this study, in order to perform dynamic design of machine tools reasonably and effectively, a method was formulated to be applicable to the structures connected by joints having elasticity and damping by using substructure synthesis method. And to analyze chatter-free performance, a 3 dimensional cutting dynamics theory was used. Computer program package for the dynamic design of machine tools was developed by combining those and spplied to improvement of performance of NC lathe. Also, the optimization in the structural modifications of machine tool substructure was studied by evaluating the effects of the substructural modifications on total system performan