Generalized internal vibrational coordinates are optimized and used to describe highly excited vibrational motions in the N2O molecule. These coordinates are defined as the magnitudes of two vectors, which are expressed as linear combinations of the internal displacement vectors and the angle formed between them. They depend on two parameters and contain, as particular cases, valence and orthogonal (Jacobi, Radau, etc.) coordinate systems. The coordinates are optimized by minimizing unconverged variationally computed vibrational energies with respect to the external parameters. A comparison of the optimal internal coordinates derived for N2O with valence and hyperspherical normal coordinates is made. The optimal internal coordinates are also used to determine a new potential energy function for N2O from the observed vibrational frequencies up to 15 000 cm(-1) using fully variational calculations. The quality of the adjusted potential energy function is checked by computing vibrational-rotation energy levels and rotational constants for Sigma, Pi, Delta, Phi, and Gamma states and comparing them with the observed values.