The theoretical error of elliptical groove in outer race of plunging constant velocity joint ground by finger grinding wheel is about 0.004 mm. In order to decrease the error, a new grinding method with basin grinding wheel is proposed. When we optimize the design parameters, the basin grinding wheel will avoid the problems that the feasibility and grinding accuracy are restricted by the interference of the head in the grinding process by means of finger grinding wheel, and can be used to ensure the machining precision and the sectional shape of the raceway to the greatest extent. Aiming at the grinding process with basin grinding wheel, the paper establishes the mathematical model, optimizes the parameters by using simplex algorithm, studies the processing principle in detail, and analyzes the machining errors. The simulation results indicate that the theoretical error for elliptical groove ground by basin grinding wheel will be reduced to 0.631 μm.