A system and method by which an orthodontic appliance is automatically designed and manufactured from digital lower jaw and tooth shape data of a patient provides for preferably scanning a model of the patient's mouth to produce two or three dimensional images and digitizing contours and selected points. A computer is programmed to construct archforms and calculate finish positions of the teeth, then to design an appliance, preferably including archwires and brackets, to move the teeth to the calculated positions. The lower teeth are positioned at their roots on an arch defined by the lower jaw bone, and the arch is modified to best fit the tooth tips on a smooth curve. Upper archforms are constructed for the upper teeth. Then, machine code is generated and appliances are automatically produced that will straighten the teeth of the patient. Custom placement jigs are also automatically designed and fabricated and are provided with the custom appliance to position the appliance on the patient's teeth.