A variety of restoration algorithms for ATM network have been investigated recently. This paper proposed an efficient spare capacity allocation strategy for ATM survivable networks, to obtain the better cost-performance feature. Spare capacity on every link of ATM VP-based network is taken as the object of manipulation. Three restraint condition formulas are derived for establishment of a new working VP (W-VP) or a new backup-VP (B-VP), with respect to two parameters: the spare capacity ratio and the spare capacity shared ratio of each link. A hybrid self-healing mechanism with priority restoration [I1] is deployed to cooperate with the allocation strategy. Through computer simulation, the impact of these two parameters is studied, and the value of them can be adjusted according to the dynamic load of an ATM network. As a result, the optimum amount and location of spare capacity can achieve in the ATM network, under the required survivability performance (e.g., restoration ratio, restoration time). Thus the total survivability cost of ATM network can be minimized.