In this paper, we propose an efficient two-step pattern matching method which promises shape distortion-tolerant recognition of handwritten of handwritten Hangul syllables. In the first step, nonlinear shape normalization is carried out to compensate for global shape distortions in handwritten characters, then a preliminary classification based on simple pattern matching is performed. In the next step, nonlinear pattern matching which achieves best matching between input and reference pattern is carried out to compensate for local shape distortions, then detailed classification which determines the final result of classification is performed. As the performance of recognition systems based on pattern matching methods is greatly effected by the quality of reference patterns. we construct reference patterns by combining the proposed nonlinear pattern matching method with a well-known averaging techniques. Experimental results reveal that recognition performance is greatly improved by the proposed two-step pattern matching method and the reference pattern construction scheme.