Variational mode decomposition is a powerful signal processing technique that can adaptively decompose a multi-component signal into a number of modes, via solving an optimization problem. The optimal performance of this method in signal decomposition and avoiding of the mode mixing problem strictly relies on the true selection of decomposition parameters, that is, the number of extracted modes (K) and the mode frequency bandwidth control parameter (α). In the literature, the optimal values of these parameters are achieved by evaluating fault-related indices like kurtosis, but such an index is inefficient in judging the decomposition of healthy (without fault-related components), low-defective, and high-noise signals. In this research, a novel method called fine-tuned variational mode decomposition is proposed to determine the optimal values of decomposition parameters K and α, by judging the adaptive indices. In this proposed method, the optimal values of these parameters are obtained by minimizing the mean bandwidth of the extracted modes. In order to achieve these optimal values, the mean correlation coefficients between the adjacent modes and the energy loss coefficient between the original signal and the reconstructed signal, should not exceed of defined thresholds for optimal values. The proposed method is applied to the simulation signal and experimental ones collected from the automobile gearbox system. Comparing this method with those in the literature exhibits its higher effectiveness in the true decomposition of signals with different natures. It is also shown that using the proposed method for signal decomposition is able to correctly classify the healthy and defective states of the gearbox system alongside the principal component analysis method and support vector machine classifier.