A directly adaptive fuzzy algorithm is applied in vehicle adaptive cruise control system. The basic principle of the adaptive fuzzy algorithm is analyzed. The initial value of the fuzzy based vector is given by the traditional fuzzy membership. Adaptive law of the adjustable parameters θ is also determined. The directly adaptive fuzzy ACC controller is designed based on Matlab fuzzy toolbox. Matlab-Simulink is adopted to test the function of the adaptive fuzzy ACC controller. The control system is established using a 7 DOF vehicle dynamics model. Simulation results indicate that the principle of the method is correct and it performs well both in cruise and distance keeping.