In this paper, the thermal dynamic analysis of a multi-functional heat pump system (MHPS) is made in comparison with a conventional heat pump air conditioning system. Energy and exergy efficiencies of the different system's are calculated to study influences of the components parameters, operation conditions and operation modes on the system performance. Variation of the MHPS performance with increasing hot water temperature is investigated, and performances of the major components are also studied in order to optimize the structure and operation of MHPS. (C) 2013 Elsevier Ltd. All rights reserved.