A system and method for effectively implementing an optimized language model for speech recognition includes initial language models each created by combining source models according to selectable interpolation coefficients that define proportional relationships for combining the source models. A rescoring module iteratively utilizes the initial language models to process input development data for calculating word-error rates that each correspond to a different one of the initial language models. An optimized language model is then selected from the initial language models by identifying an optimal word-error rate from among the foregoing word-error rates. The speech recognizer may then utilize the optimized language model for effectively performing various speech recognition procedures.