Automatic Gage Control (AGC) System is very important for cold tandem mill rolling of steel. We studied a new Gage and Tension Control System, based on Inverse Linear Quadratic (ILQ) Design Theory. At first, we designed the ILQ controller for the actual plant, the first stand of cold tandem mill. Next we analysed the essence of ILQ control law, and modified the original controller. Finally we installed the modified controller to the actual plant, and achieved very high accuracy of cold strip gage. The most important feature of this study is the analysis of the essence of ILQ controller based on the parametric representation of control law.