Fuel cost is the single most important operating cost in a circulating fluidized bed boiler. A well-designed CFB boiler can burn coal with a fairly high efficiency and within acceptable levels of gaseous emission. However, departure from ideal operating conditions, which often occurs in operating plants, throws the plant far off the designed performance. A good understanding of the combustion and pollutant generating processes in the boiler furnace can greatly avoid such costly upsets. This paper reviews the current understanding of combustion process. It shows that in spite of its fuel flexibility a CFB boiler may need different furnace volumes to provide the optimum combustion conditions. Depending upon the circumstances the coal char could burn in one of three combustion regimes. Several performance predictive models are available for performance analysis of the furnace. Simplified equations and methods are provided for prediction of sulfur capture and nitric oxide control capability of a CFB furnace.