Dynamic stability problems are usually overcome through the application of Power System Stabilizers. This paper presents an alternative approach for power system stabilization based upon the tuning of the existing generator controllers, both governors and A.V.R.'s. The sensitivities of the eigenvalues to the controller parameters are evaluated and an optimization technique is developed to maximize the dynamic stability. Application of the parameter optimization method on a realistic model of the Hellenic Interconnected System has proved an efficient way to stabilize a number of unstable oscillatory modes by relatively small parameter variations. The results are tested with a nonlinear simulation program and the achieved stabilization, as shown by the rotor angle swings, is found to be significant.