Optimal collision avoidance algorithm for unmanned aerial vehicles based on proportional navigation guidance law is investigated this paper. Although proportional navigation guidance law is widely used in missile guidance problems, it can be used in collision avoidance problem by guiding the relative velocity vector to collision avoidance vector. The optimal navigation coefficient can be obtained if an obstacle if an obstacle moves at constant velocity vector. The stability of the proposed algorithm is also investigated. The stability can be obtained by choosing a proper navigation coefficient.