A self-tuning ship-autopilot design is presented that reconciles the conflicting demands of course keeping and of manoeuvring by using two modes of operation. During the course-keeping mode the performance criterion is formulated to minimise heading error, propulsion losses and rudder activity, while in the manoeuvring phase the concern is simply to minimise heading error. The system parameters are identified using recursive least-squares estimation to confer on the autopilot a high degree of adaptability, as illustrated in the simulation studies of part 2 of the paper.