In the process of flank milling of a no-developable ruled surface, the non-expansible characteristic of the curved surface could negatively affect the surface finish of the mechanical parts. To be specific, tool runout is a factor that contributes to the decreased machining accuracy of the surface. In order to solve this problem, a cutter position optimization method based on tool runout is proposed in this paper. The coupling of the principle error and tool runout error was analyzed in the first place. The actual rotation radius of the cutter corresponding to the discrete points of the original cutter axis was then obtained through a method of measurement. The discrete points of the cutter axis in the case of tool runout were located by subdividing the surface continuously in the parameter field of the design surface. An error measurement function of the no-developable ruled surface in the case of the tool runout was constructed based on the new cutter axis position. Using a two-step optimization algorithm, the initial cutter position was finally calculated which was then further optimized through a single-point swing method with the factor of tool runout taken into consideration. The results show that, after incorporating the tool runout factor into the error optimization model, the average machining error is reduced by 25.6% and the overcutting rate is reduced by 18.8%. The surface finish of the mechanical parts is effectively improved.