Ditgtial Terrain Model (DTM) is one of teh most important applciation aspect adn main component in modern digital mapping system, particularly in contouring context. hence an efficient DTM is very much desired. This efficiency is essentially a problem of interpolation. In this dissertation, a thouraough review of all interplation methods were done. Optimum interpolation which consisted of sapling size, sampling pattern and interpolation algorithm were next discussed. To appreciate more closely the problem of interpolation, a practical experiment using two different samoling sizes and interpolation algorithms was carried out and twelve contour maps were produced for comparison. Problems and shortcomings faced byt eh country's topographical map producation using conventonal contouring technique were also investigated. The results of the above studies and investigations were finally used to formulate a two phases programme for DTM interpolation procedures to be proposed to the National Mapping Agency.This proposal is an optimum interpolation formula for contouring application and establishing of grid data base in Malaysia context.