Problems of pressure impact and improper neutral angle of a neutral valve for hydrostatic transmissions were solved using Taguchi method for robust optimal design with aids of Grey relational analysis and computer simulation. An ITI-Simulation X-based model of a hydrostatic transmission with the neutral valve was developed and used to simulate the pressure impact and extended neutral angle during the pressure modulation when the swash plate angled from neutral to forth or back. The simulation results were converted to the Grey relational coefficients for 108 combinations of 27 design and four operational conditions. The Grey relational grades were also calculated for seven design parameters and each of the design conditions as the performance index. Through three times repeated robust optimal design process, the design parameters reached to the optimal which satisfied the performance goals of the neutral valve set to smaller the better for the pressure impact and nominal the best for the extended neutral valve.