An optimal replacement model for gamma deteriorating systems is studied. This methodology uses a gamma distribution to model the material degradation, and the impact of imperfect maintenance actions on the system reliability is investigated. The state of a degrading system immediately after the imperfect maintenance action is assumed as a random variable and the maintenance time follows a geometric process. A maintenance policy (N) is applied by which the system will be repaired whenever it experiences Nth preventive maintenance (PM), and an optimal policy (N*) could be determined numerically or analytically for minimizing the long-run average cost per unit time. Finally, a numerical example is presented to demonstrate the use of this policy.