A novel design of a micromachined vibrating rate gyroscope is presented. The rate gyroscope consists of a suspended proof mass which is attached by indium bumps to a CMOS chip. The proof mass is excited to vibration by electrostatic force. The displacements due to rate are sensed optically, using CMOS-integrated photodiodes and analog electronics. System considerations, including the mechanical behavior, optical sensing, electronics, and noise sources of the rate gyroscope, are discussed. An expression for the noise equivalent rate (NER) of the system is obtained in order to derive an optimal design approach for the rate gyroscope. Optimal design and simulations of a case study of a rate gyroscope are presented. The device shows the ability of sensing 1 deg/h even at moderate quality factors of the order of 5000 and low-excitation voltages of 2.25 V. Index Terms - Gyroscope, MEMOS, MIDOS, noise, optical, rate.