Optimization of hybrid photovoltaic/wind system for Kuala Terengganu, Malaysia has been implemented by considering optimal sizing of photovoltaic array, wind turbine, and battery. The optimization technique is done based on loss of load probability and system cost. Simulation models of hybrid photovoltaic/wind system are developed by using daily solar energy and wind speed records and considering many configurations of photovoltaic array, wind turbine, and storage battery. The optimization performed in this research aims to select the optimal capacities of photovoltaic array and wind turbine, which give minimum system cost.