A method of layout optimization containing parameterized cells includes reading a physical design containing parameterized cells, creating a new version for each of usage of a given parameterized cell. The method optimizes physical design shapes of each new version of the parameterized cell by assigning variables to parameters of the parameterized cell according to a desired objective. Then, the method updates the parameters of each new version of the parameterized cell and replaces each new version of the parameterized cell with an instance of the parameterized cell having updated parameters. The method can optionally adjust physical design shapes based on constraints related to the parameters.