As plastics shrink when changing from a molten to a solid state, mold cavities must by made larger than the product specification, In making molded gears, the teeth in the cavity must be carefully compensated for shrinkage so that the teeth of gears will have the correct profile. Two compensation methods are widely used in the cavity design. One is the compensation of a module and the other is the modification of a pressure angle and profile shifting coefficient. These methods, however, do not provide a gear cavity with all disign parameters for gears and several parameters are determined by experience. In this paper, the new design technique, namely the compensation method of design parameters, was proposed , which is based on the three kinds of shrinkage rates obtained from the measuring data of the prototype of molded gears. Using the shrinkage rates in the tip circle, tooth heigth and tooth thickness, we calculate the whole design parameters of a gear cavity. Thus, the gear cavity is considered as a complete gear with the compensated module, pressure angle, profile shifting coefficient, clearance coefficient and back lash amount so that the formula of gears can be applied to the cavity design effectively. Experimental results show that more precision molded gears can be made by using the proposed design method.