A gas-assisted hydraulic breaker uses both hydraulic and pneumatic energies and the appropriate balance between them mostly effects its performance. Mathematical modeling of the breaker is established and verified by experiment. Through sensitivity analysis using AMESim, the key design parameters are selected, which mostly affect the performance of the breaker. Taguchi method is used to optimize the key design parameters to maximize the output power for long and short strokes through simulation. As the result, the output power as well as the impact energy are increased significantly compared with the existing design. The pressure pulsation in the supply line is reduced to a tolerable level and the dynamic characteristics of the piston displacement is also improved by the optimization.