The objective of the parameter optimization of thermal system is to increase the system efficiency and decrease the cost of unit output power under the condition which the total output power can meet the actual requirements in energy applications. In this paper, a new parameter optimization method for actual thermal system was proposed, which was called the Equivalent Transformation Constant State Finite-time Thermodynamic Analysis Method and had two calculation steps. The first step was choosing the optimum efficiency under the principle of taking into account both output power and efficiency weights, and the second step was calculating the optimum total heat transfer coefficient ratio and other concerned parameters with the optimum efficiency fixed. The related calculation principles and formulas for parameter optimizations of this method were given. That provided the guiding theoretical basis for actual thermal system efficiency increase and cost decrease of unit output power. (C) 2016 Elsevier Ltd. All rights reserved.