This article presents an acetylene production process by partial oxidation/combustion of natural gas. The thermodynamic performance and exergy analysis in the process are investigated using the flow-sheeting program Aspen Plus. The results indicate that the most important destruction of exergy is found to occur in the reactor and water quenching scrubber, amounting to 8.23% and 10.39%, respectively, of the entire system. Based on the results of thermodynamic and exergy analysis, the acetylene reactor has been retrofitted. The improvement ratios of molar O-2 to CH4 and molar CO to CH4 are 0.65 and 0.20, respectively. An improvement of the acetylene production system is proposed. Adopting the improvement operation conditions and using oil to realize the reaction heat recovery, the feedstock of natural gas is reduced by 9.88% and the exergy loss in the retrofitting process is decreased by 19.71% compared to the original process.