Abstract: A state assignment based algorithm is presented for simultaneous power and area optimization of finite state machines.Based on an analysis of the existing cost functions,a new cost function is proposed. By using genetic algorithm,which has the capability of multiple objective optimization,simultaneous optimization of power and area is implemented.The proposed algorithm is applied to 17 MCNC benchmarks. The results show that the proposed algorithm is advantageous over the existing power optimization algorithms in terms of simultaneous power and area optimization capability.