In this paper optimization of DSR is achieved using New Link Cache structure and Source Transparent Route Maintenance Method. The new link cache effectively utilizes the memory by caching the routes in adjacent list type of data structures. It selects the shortest hop and least congested path, which in turn reduce the control packets, route request packets, route reply packets and increase the data packets forwarded by the nodes. To solve the DSR route maintenance problem during high mobility, source transparent route maintenance method is introduced in this paper. This method has two schemes namely cache validation and local route repair. These schemes reduce the packet loss, end-to-end delay and increase the throughput.