To improve the dynamic response of a virtual synchronous generator (VSG) under various disturbances, a parameter coordination optimization method of virtual inertia and damping coefficient is proposed. The second-order transfer function between the VSG active power command and output electromagnetic power is deduced, and the relationship between the VSG dynamic response characteristics and virtual inertia and damping coefficient is quantitatively analyzed. The two parameters are adjusted in early disturbance to make the underdamped VSG speed up regulation, and make the VSG overdamped during late disturbance to reduce overshoot. This method takes into account both power regulation speed and frequency stability, and reduces the charge and discharge depth of energy storage. Finally, simulation under VSG output disturbance and power grid fault disturbance is carried out based on Matlab-Simulink simulation software. The dynamic responses before and after parameter optimization are compared. The results verify the superiority and stability of the proposed optimization method. This can effectively improve the dynamic response of the VSG and prolong the energy storage life of VSG. This work is supported by the National Natural Science Foundation of China (No. 51377119).