In this paper, the performance of an internal combustion engine is evaluated at the steady-state condition by application of energy and exergy analysis using the experimental test results. The energy and exergy balances are calculated at different engine speeds. The results show that the heat rejection of energy and exergy flow increases with increasing engine speed. The exergy efficiencies are slightly higher than the corresponding energy efficiencies. The results of this study have revealed that the most important source of the system inefficiency is the destruction of exergy by irreversible processes, mostly by the combustion. One can conclude that the use of a combined energy and exergy analysis provides better criteria for the performance assessment of a thermal system.