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This paper presents a new method to design a Power System Stabilizer (PSS) using Smart Bacteria Foraging Algorithm (SBFA). The proposed algorithm can conduct bacteria at a smart direction to decrease the cost function better than conventional Bacteria Foraging (BFA) method. This algorithm not only considers social intelligence, but also emphasizes the individual intelligence of bacteria for finding a better nutrition path. This approach leads to have a higher convergence speed and also a better performance than BFA. Simulation results in Two-area four-machine power system show that SBFA improves the dynamic performance of the power system.