The traditional performance optimization method of embedded Linux terminal system usually ignores the hardware optimization, resulting in poor overall optimization results. Therefore，an optimization method of embedded Linux terminal system based on ARM is proposed, and the memory allocation diagram of embedded Linux terminal system based on ARM is given. The memory allocation problem of embedded Linux terminal system is transformed into 0-1 knapsack problem, and the knapsack problem is solved by dynamic programming method. To realize the memory optimization of embedded Linux terminal system. To realize L through ARM hardware interrupt management and data processing Inux terminal system real-time optimization arm uses the hardware interrupt orientation function and priority control function of the advanced interrupt controller AIC to manage the interrupt. The data processing adopts the active dropping strategy to deal with the real-time problem and removes some useless or unimportant data. The experimental results show that. When the proposed method is applied to real-time optimization of embedded Linux terminal system, the delay of embedded Linux terminal system is significantly reduced, and memory allocation is more efficient and stable.