Kinematical optimization and sensitivity analysis of circular-cut spiral bevel gears are investigated in this paper. Based on the Gleason spiral bevel gear generator and EPG test machine, a mathematical model is proposed to simulate the tooth contact conditions of the spiral bevel gear set. All the machine settings and assembly data are simulated by simplified parameters. The tooth contact patterns and kinematic errors are obtained by the proposed mathematical model and the tooth contact analysis techniques. Loaded tooth contact patterns are obtained by the differential geometry and the Hertz contact formulas. Tooth surface sensitivity due to the variation of machine settings is studied. The corrective machine settings can be calculated by the sensitive matrix and the linear regression method. An optimization algorithm is also developed to minimize the kinematic errors and the discontinuity of tooth meshing. According to the proposed studies, an improved procedure for development of spiral bevel gears is suggested. The results of this paper can be applied to determine the sensitivity and precision requirements in manufacturing, and improve the running quality of the spiral bevel gears. Two examples are presented to demonstrate the applications of the optimization model.