A novel method is proposed in this paper to determine the time-delay stability upper-bound of the power system with wide-area damping controllers based on the improved free-weighting matrix and Generalized Eigenvalue Problem (gevp). First, a new class of Lyapunov–Krasovskii functional is constructed and its derivative function along the system is gained. Second, necessary loose items are added to the derivative function to reduce conservativeness, and the time-delay stability criterion based on the improved free-weighting matrices is formed. And then the time-delay stability criterion is equivalently transformed to a generalized eigenvalue problem. Thus by solving the gevp, the time-delay stability upper bound of the system is gained. Time-domain simulation tests on the IEEE 4-machine 11-bus system and IEEE 16-machine 68-bus system verify the correctness and effectiveness of the method.