The effects of inefficiencies in the compression, expansion and regeneration processes on engine performance have been evaluated theoretically for a Stirling heat engine operating in a closed regenerative thermodynamic cycle. The irreversible cycle has been optimized by using the maximum power density technique. Maximized power and maximized power density are obtained for different n(ex), tau, alpha(c), alpha(h), eta(c), eta(ex) and eta(reg) values. The maximum efficiencies have been found very close to the values corresponding to the maximum power density conditions but far from the values at maximum power. It has been found that the engines designed by considering the maximum power density have high efficiencies and small sizes under the same prescribed conditions.