At present， PSS is still the most economical and feasible method to damp the power oscillation. Decision of strongcorrelation generators to the oscillation modes and parameter optimization of PSS are two important factors. A mode-synthesisanalysis method is proposed for large amplitude power oscillation on tie-line when disturbance occurs in the interconnectedpower grids. This method combines Prony algorithm and eigenvalue analysis method by time domain simulation. Theinformation of tie-line oscillation mode such as frequency and damping can be obtained through this method. Thus， installationplaces of PSS are found. After parameter optimization by using two points fitting method， PSS can offer leading phase inbroadband and damp more oscillation modes. The simulation results of an actual power grid show the effectiveness of theproposed method.