The fundamental lateral performance capabilities of rubber-tired automated guideway transit (AGT) vehicles operating under automatic steering control on exclusive guideways are discussed. Control is achieved by steering the front wheels in response to signals derived from the position errors between the vehicle and a guideway-based reference containing random irregularities. Optimal control techniques are used to synthesize controllers which minimize a performance index consisting of mean square lateral acceleration and tracking error, defining a frontier which limits the performance of vehicles steered by a broad class of controllers. Simple single-sensor proportional steering controllers are found to achieve near-optimum performance for a typical AGT vehicle. The degradations in performance arising from dynamic lags in the steering actuator and operation at off-design speeds are shown.