This paper addresses an optimal model reference adaptive system (MRAS) to design power system stabilizer (PSS) in multi-machine electric power systems. Weighting factors of the proposed MRAS are adjusted by particle swarm optimization (PSO) as well as its input signal is limited by a normalization technique to assure network stability. The proposed modified-optimal MRAS-PSS is evaluated against conventional PSS to demonstrate its advantages. In order to investigate the performance of the proposed MRAS-PSS under parametric uncertainties, three operating conditions are defined and simulated. Several nonlinear and time-domain simulations are carried out to validate the viability and effectiveness of the proposed MRAS-PSS under network uncertainties.