To increase the performance of Stirling engines and analyze their operations, a second-order Stirling model, which includes thermal losses, has been developed and used to optimize the performance and design parameters of the engine. This model has been tested using the experimental data obtained from the General Motor GPU-3 Stirling engine prototype. The model has also been used to investigate the effect of the geometrical and physical parameters on Stirling engine performance and to determine the optimal parameters for acceptable operational gas pressure. When the optimal design parameters are introduced in the model, the engine efficiency increases from 39% to 51%; the engine power is enhanced by approximately 20%, whereas the engine average pressure increases slightly. (C) 2008 Elsevier Ltd. All rights reserved.