An optimum approach for the design of flexible pavements has been developed which utilizes the anticipated performance of pavement and its life-cycle cost. The optimum approach developed has been applied to the design method recommended by the American Association of State Highway and Transportation Officials (AASHTO) for the design of flexible pavements. Pavement performance, defined using the initial and terminal serviceability indices, is a major design parameter that directly affects future pavement condition, initial construction cost and maintenance and added user costs. The optimum design is the one associated with the optimum terminal serviceability index and corresponds to the most cost-effective design. Cost-effectiveness is defined using a parameter called pavement life-cycle disutility which is the ratio of the pavement life-cycle cost to the pavement life-cycle performance identified by the area under the corresponding performance curve. The optimum pavement design is the one associated with the minimum pavement life-cycle disutility value and yields the optimum terminal serviceability index. The optimum terminal serviceability index value replaces the general AASHTO design index recommendations of 2.0 and 2.5 for minor and major roads, respectively. A performance curve is generated for a particular pavement structure using an incremental solution of the AASHTO basic design equation. It is shown that pavements should be designed for higher terminal serviceability index values than currently recommended.