In this study, a method is proposed for the advanced manufacture of face-hobbed spiral bevel gears on CNC hypoid generators with optimized tooth surface geometry. An optimization methodology is applied to systematically define optimal head-cutter geometry and machine tool settings to introduce optimal tooth modifications. The goal of the optimization is to simultaneously minimize tooth contact pressures and angular displacement error of the driven gear (the transmission error). The optimization is based on machine tool setting variation on the cradle-type generator conducted by optimal polynomial functions. An algorithm is developed for the execution of motions on the CNC hypoid generator using the relations on the cradle-type machine. Effectiveness of the method was demonstrated by using a face-hobbed spiral bevel gear example. Significant reductions in the maximum tooth contact pressure and in the transmission errors were obtained.