Based on the gear meshing theory, the mathematical model of inner helical gear form grinding is established. In order to get rid of the grinding interference, numerical simulation is used to optimize the diameter of grinding wheel and its installation angle. The wheel profile obtained by means of numerical simulation is transformed into the end section of tooth firstly, and then compared with the theoretical involute tooth. Substitute the optimized diameter of grinding wheel and its installation angle into meshing equation, the wheel profile can be obtained by solving meshing equation with Newton iteration method. Wheel dressing and simulating analysis software are prepared based on VC++6.0.