This paper presents a systematic tolerancing method based on a new modeling concept called Functional Group. The tolerancing method is composed of two types of toler-ancing: (1) " internal tolerancing " limits assembly errors due to the overabundance of contact points between two surface groups and (2) " external tolerancing " places one surface group next to the other. First, several tolerancing methods are presented from the literature. The small displacement screw (SDS) method is also described because it represents a very important investigation tool. Then the concept of the functional group is proposed for the tolerancing of mechanical systems. Finally, this new systematic method is implemented with an actual example in which functional toleranc-ing is easily carried out.