A new method is presented for advanced manufacture of hypoid gears on numerical controlled machine tool. The tool geometry and machine tool settings are determined to introduce the optimal tooth modifications into the teeth of hypoid gears. The goal is to reduce the maximum tooth contact stresses, angular displacement error of the driven gear, and energy losses in the oil film existing between tooth surfaces. The calculation is based on the optimal variation of machine tool settings on the classical machine tool for hypoid gear manufacture. The novelty of the method is that during the machining process of teeth surfaces, the variation of machine tool settings on the cradle-type hypoid generator is conducted by polynomial functions of fifth-order. By an algorithm, this variation of machine tool settings is transferred to the numerical controlled machine tool for hypoid gear manufacture (hypoid generator). The obtained results have shown that by applying the optimal manufacture process, considerable reductions in tooth contact stresses and angular displacement errors of the driven gear, and a moderate reduction in energy losses were obtained. Therefore, by applying this new method in practice, advanced manufacture of hypoid gears on CNC hypoid generator is made possible, resulting improved operating characteristics of the hypoid gear pair.