This work presents an iterative method for modelling the effect of ambient air temperature on the air-cooled organic Rankine cycle. The ambient temperature affects the condenser performance, and hence the performance of the whole cycle, in two ways. First, changing the equilibrium pressure inside the condenser, the turbine outlet pressure and the turbine pressure ratio vary. Since the turbine pressure ratio is a major parameter in determining the power generated by a turbine, the plant output is directly affected. Second, changing the condenser outlet temperature with ambient temperature, the pump inlet and outlet conditions are changed. Thus, the vapourizer equilibrium temperature and pressure are influenced. The developed method iteratively seeks the equilibrium conditions for both the condenser and vapourizer. Two case studies based on a real plant performance have been carried out to demonstrate the validity of the method. The developed method demonstrates robustness and converges regardless of the initial conditions allowed by the physical properties of the working fluid. This method is effective for cycles that use saturated vapour as well as superheated vapour under static or dynamic conditions with appropriate initial conditions and constraints. The developed method may be applied to any Rankine cycle with closed cycle operation. Copyright (C) 2010 John Wiley & Sons, Ltd.