For city buses, especially hybrid electric buses, the requirements for the fuel economy and low noises are stricter, comparing with the momentum quality. Since hybrid electric buses sometimes run without the engine, the noises that the transmission makes become the major type. To get better fuel economy and lower noises, this paper focuses on optimizing the characteristics of the automatic mechanical transmission (AMT) in a hybrid electric city bus, and the studies are done as follows. Firstly, in order to reduce the fuel consumption, the transmission ratios are optimized by the co-simulation and optimization in CRUISE and MATLAB, with the limitation of the quality of driving momentum. Secondly, for the purpose of lightweight and lower transmission noise, multi-objective optimization based on reliability is applied in transmission geometric optimization design, the objective function are the smallest volume and the biggest transmission gear contact ratio of the transmission.