To improve the practicability of the waste heat recovery system for internal combustion engines, the compact potential of exhaust heat exchangers using metal foams is investigated. In the present study, the performance of compact exhaust heat exchangers is compared with that of a conventional shell and tube heat exchanger in a real test bench. Both heat transfer and pressure drop performance are considered when assessing the performance of heat exchangers because these two factors normally show a trade-off relationship when designing exhaust heat exchangers. Compared with the conventional heat exchanger, the compact heat exchanger can achieve a similar pressure drop, and at the same time the heat transfer is increased by 30%, whereas the volume and the weight are each reduced by 2/3. The performance of compact heat exchangers with six types of Ni metal foams is also investigated under different mass flow rates and thicknesses of the porous layer. Results show that the optimum compact heat exchanger enhances the comprehensive performance 1.9 times compared with original one. This study shows that metal foams have great potential in realizing a compact exhaust heat exchanger for engine waste heat recovery.