This paper presents a study case of applying PMU jointly with PSS design in a real large scale Chinese power system to suppress inter-area power oscillations. The application uses PMU measured feedback signals to design a PSS by using the technique of the damping torque analysis (DTA). In the paper, a mathematical model of multi-machine power system is described firstly, followed by formulation of the residue and DTA indices. This provides the basis of selecting PMU measured feedback signals and location of PSS to achieve the best result of damping power system inter-area oscillations. Simulation results of applying the method presented in the paper in a real large-scale Chinese power system demonstrate the effectiveness of the coordinated design of PMU and PSS to suppress inter-area power oscillations.