A new method for analyzing frequency-dependent transmission line systems with nonlinear terminations is presented. The generalized scattering matrix formulation is used as the foundation for the time domain iteration scheme. Compared to the admittance matrix approach proposed in a previous paper, it has the advantage of shorter impulse response which leads to smaller computer memory requirement and faster computation time. Examples of a microstrip line loaded with nonlinear elements are given to illustrate the efficiency of this method.