The thermoelectric generator (TEG) is a promising device to convert waste heat into electricity. This work numerically simulates the performance of a TEG system in which a TEG module and heat sinks are considered. The heat transfer rate of the heat sinks is approximated by an analytical method. To maximize the efficiency of the system, the Taguchi method is employed. Six factors, including the length and width of heat sink, the height and thickness of fins, hot side temperature, and external load resistance, along with five levels are taken into account. The orthogonal array employed in the Taguchi method is able to significantly reduce the time for seeking the optimum operation. The analysis suggests that the hot side temperature is the most important factor in determining the output power and efficiency of the TEG system, whereas the heat sink width almost plays no role on them. The influences of the four geometric parameters on the heat transfer rate of heat sinks are also evaluated by the Taguchi method. The results indicate that the heat sink length has the largest effect on the heat transfer rate. Two-stage optimization for the performance of the TEG system is developed. The first-stage optimum operation is obtained from the Taguchi approach, and the second-stage optimization is performed from the power-current curve. After undergoing the second-stage optimization, the output power of the system in the first stage can be further improved by around 6%. (C) 2015 Elsevier Ltd. All rights reserved.