It is necessary to modify the tooth surface of hypoid gears because of the need to deal with various kinds of errors. Skilled workers treat this problem using the trial-and-error method so far. In this paper, a theoretical method for cutting hypoid pinion under consideration of tooth surface modification is proposed. The method is based on the theory of basic member. The non-generating ring gear is cut by Gleason's Formate method. The pinion is generated by a newly introduced quasi-basic member whose tooth (tool) surface is a conventional conical surface. The quasi-basic member is a substitute tool gear for the basic member which is an imaginary gear generated by a ring gear. The tool surface of the quasi-basic member is in contact with the imaginary generated tooth surface of the basic member at a point, and envelops the imaginary surface in tool material side. There is a small clearance between the two surfaces. This clearance modifies the pinion tooth surface. The essence of this method is the setup of the quasi-basic member on the Gleason hypoid generator, namely, the determination of machine settings.