A parameter modification guiding optimization method combined with fuzzy optimization was applied to improve the design of a rice plug seedling transplanting mechanism using a planetary gear train with elliptical gears and an incomplete non-circular gear. The laboratory kinematics was examined, and seedling transplanting tests were conducted. Based on the work principle analysis of the transplanting mechanism for rice plug seedlings, numerical kinematic objective functions were established using fuzzy objectives requirements such as transplanting trajectory and posture. Subordinate functions were determined to describe the objective functions. Then the optimization model of the mechanism was constructed which took the value of the subordinate degree of objective functions as the optimization objectives and the motion interference, height of the transplanting trajectory and mechanical structure as the constraint conditions. Parameter guiding optimization software based on Visual Basic 6.0 was developed independently to determine a set of better parameters for the mechanism, which can reduce dependence on expert experience and improve the efficiency of the design. The mechanism structure was designed, and a physical prototype was manufactured. A high-speed digital video camera and image processing technology were used to perform the kinematics bench tests to obtain the transplanting trajectory and posture of the mechanism. The consistency between the test results and theoretical results shows that the optimized mechanism can satisfy the transplanting requirements and that the design method and results are also accurate. Finally, rice seedling transplanting tests were conducted to verify the transplanting performance of the mechanism. The mechanism extracted 200 seedlings per minute per row with a success ratio of 95.89%; the mechanism also displayed a good effect in seedling pushing, showing that the mechanism could be applied in a practical machine.