This study, investigates the positioning accuracy of the hydraulic system that is controlled by FM-357 function module used in the control of CNC machine tools. The system consists of two axes driven by two cylinders directed by proportional directional valves. The effects of feed rate, motion distance, direction and inertia load on the positioning accuracy and the determination of their optimum levels are achieved via Taguchi method. According to this, minimum positioning error is obtained in the motion distance of 5mm, in "-" direction and at the inertia load of 5kg. Lastly, the confirmation experiments showed that Taguchi method achieves the optimization of the system with sufficient accuracy.