This article proposes a new method for optimizing tooth profile modification amounts of cycloidal reducers. By optimizing transmission error and transmission ratio fluctuation, the objective optimization function is determined, and the influence of optimized modification amount on various transmission performances is studied. In addition, this article also conducted mechanical analysis on the cycloidal reducer and obtained the results of tooth contact force. The mathematical model for the mechanical analysis of the cycloidal reducer was established, and the variation law of force distribution between the internal and external gears of the cycloidal reducer was calculated. The results indicate that the needle tooth force, bearing force, transmission ratio, and transmission error obtained through the mechanical analysis model using optimized modification quantities tend to stabilize and exhibit periodic changes, which corresponds to the actual scenario.