Running FSX on a windows 7 computer.  On 727 Captain, both 727-100 and 727-200, autopilot is working fine in all modes but when I reach cruise altitude and engage the altitude hold, the airplane continuously makes minor pitch adjustments at a high rate frequency.  The pitch change isn't more than a degree or two, up and down.  Now this what the altitude hold should do in reality, but it's a jittery instantaneous change of pitch, not smooth and unnoticable like it should be.  The rate of climb gague needle can also be observed to respond to these jittry movements.  This goes away when the altitude hold is turned off and the descent is begun. I also have the 707 Captain and its altitude hold works fine.

Has anyone else had this problem? And has anyone found a fix for this?

Thanks.

Negative.  Does that fix it?

Yeah, I've got Accelleration, and I tried it also with Flight Director altitude hold on, and no change.  The oscillations occur over the course of about one second, and it's not a one secondpitch up oscillation followed immediately by a one second pitch down oscillation, time varies between the two.  I've got all the patches too, and this problem also occurred before I loaded acceleration.

A couple of my planes were doing this the day before yesterday, but not yesterday.  I presumed it was winds/turbulence.

I suffered this a lot until recently with various aircraft. Any kind of weather mode - other than windless "fair weather" would keep kicking the plane out of the altitude hold.  Problem was is was always downward such that it would bump up against a kind of invisible ceiling and essentially step descend all the way to the ground. Most annoying.

The solution was my Saitek X-52, which "auto calibrates" each time you reboot your PC, was incorrectly calibrating the stick each time the PC rebooted e.g. for MS updates etc because I had left the knob/slider I use to control pitch trim out of the neutral detent.  I make sure now before a reboot the pitch wheel is in the right place and no more alititude hold problems.

I have this effect as well.  No all the time though.  I have found that if you disconnect the A/P and trim the aircraft level (or close) then re-engage the A/P it will fix the problem and stabilize at the correct ALT.  Not an ideal solution but it will work.