This paper presents a method for the optimization of multicomponent structures comprised of 2 and 3 materials considering large motion sliding contact and separation along interfaces. The structural geometry is defined by an explicit level set method, which allows for both shape and topology changes. The mechanical model assumes finite strains, a nonlinear elastic material behavior, and a quasi-static response. Identification of overlapping surface position is handled by a coupled parametric representation of contact surfaces. A stabilized Lagrange method and an active set strategy are used to model frictionless contact and separation. The mechanical model is discretized by the extended FEM, which maintains a clear definition of geometry. Face-oriented ghost penalization and dynamic relaxation are implemented to improve the stability of the physical response prediction. A nonlinear programming scheme is used to solve the optimization problem, which is regularized by introducing a perimeter penalty into the objective function. Design sensitivities are determined by the adjoint method. The main characteristics of the proposed method are studied by numerical examples in 2 dimensions. The numerical results demonstrate improved design performance when compared to models optimized with a small strain assumption. Additionally, examples with load path dependent objectives display nonintuitive designs. KEYWORDS extended finite element method, finite strain, level set methods, stabilized lagrange multiplier method, sliding contact, topology optimization [Correction added on 24 January 2018, after first online publication: absolute value symbol was missing in Equation 49, and have since been added.]