This paper presents an algorithm for the appropriate parameter selection of a power system stabilizer and power converters in two-area power systems with a series HVDC links. The method for PSS is one of the classical techniques by allocating properly poly-zero positions to fit as closely as desired the ideal phase lead and by changing the gain to produce a necessary damping torque. Proper parameter of power converters are obtained in order to have sufficient speed and stability margin to cope with changing reference values and disturbances based on the Root-locus technique. The small signal and transient stability studies using the PSS and power converters parameters obtained from these methods show that a natural oscillation frequency of the study case system is adequately damped. The simulation used in the paper was performed by the Power System Toolbox software program based on MATLAB.