The application of a steam-injected gas turbine cycle to a district heating system is analyzed from the thermodynamic and economic viewpoints. A commercially available software was used to predict the part load behavior of the plant. Good agreement of the simulation results and the measured data was found. Cost-optimal operation is achieved at the maximum allowable firing temperature, if a degree of freedom with respect to power production exists. The electricity-credit/fuel-cost ratio was identified as the most significant variable influencing the economic performance of the plant.