Tolerance design is interdisciplinary in nature and is characterized by a highly uncertain environment. In recent years, fuzzy logic has appeared as a credible alternative for tolerance design. In this paper a fuzzy based tolerance representation scheme is presented to model three dimensional (3-D) tolerances. With this representation, relative assembly tolerance constraints can be expressed. A fuzzy tolerance generation and assignment process for assembly is discussed. Fuzzy tolerance equations are generated for 3-D assembly considerations. Manufacturing process information, along with uncertain cost information modeled in fuzzy terms, is added to the system to arrive at a cost-optimal tolerance assignment.