Focusing of search judgment is one of the important parts of theodolite image measurement. Traditional hill-climbing search algorithm cannot usually focus accurately due to the interference of the evaluation function of the local extremum affected by measuring environment, such as light illumination. A compound auto-focal judgment combining image definition evaluation function and modulation transfer function (MTF) auxiliary function was introduced to improve the hill-climbing method. Definition evaluation function and MTF values of images were considered to judge the search direction together. Slanted-edge method was improved to calculate the image MTF values accurately based on the auto-selection of slanted-edge area. Lastly, the principle and implementation of the improved algorithm were given. In the theodolite auto-focusing system, the system imaging effect was validated, and different initial position and circumstances were considered using the proposed searching algorithm. The experiment results of theodolite auto-focus system show that the improved hill-climbing search algorithm can effectively eliminate the local extremum disturbance and make the system search focusing accurate and reliable.