The vertical lathe is a very popular machine tool in modem manufacturing industries because of its small area of installation. The small installation area is highly desirable for the flexibility improvement of the manufacturing systems such as FMS, CIM, and IMS. The vertical lathe, however, has much taller height compared to the traditional horizontal lathe, and consequently more severe vibrations. In this study, the structure of a vertical lathe is analyzed to investigate the dynamic properties and further to establish some ideas of the design alteration for the improved dynamic stability even at the higher operating speed. The simulation model is implemented to apply those design alterations for the optimization. The result of this study is not only prosperous but also ready to be applied to the optimum design of various machine tool structures for the improved stability.