A two-phase handoff protocol has been proposed to support inter-switch handoff in wireless ATM networks. It employs path extension for each inter-switch handoff, followed by path optimization if necessary. The design objective of this paper is to determine the best path optimization scheme that minimizes the expected total cost per call. This paper presents five path optimization schemes: exponential, periodic, Bernoulli, always perform optimization, and no optimization. Analytical models for the latter two schemes are proposed and compared with the other schemes. The effect of the inter-switch handoff rate, the call termination rate, and the link cost are investigated at each scheme. Based on the numerical results, a path optimization algorithm is proposed to select the optimal path optimization scheme at each network situation.