Abstract: Abstract: The compressed air engine is a new kind power machinery, which uses high-pressure air as its energy storage medium and working medium. The high-pressure air expands inside the cylinder to produce power. Compared to the conventional internal combustion engine, compressed air engine has many advantages in terms of simple structure, no pollutant emission and no fuel consumption, etc. Thus, the compressed air engine has attracted plenty of attention. The previous researchers almost concern about the prototype designing, working process studying and energy loss analyzing on some specific operating condition. However, it is still lack of a systematic study about the energy loss distribution of compressed air engine as well as their causes. In order to solve the issues mentioned above, the exergy loss distribution and its variation trend in the working process of a single-cylinder compressed air engine developed by Zhejiang University were studied in this paper, through applying the thermodynamic theory and exergy analysis method. At first, the mathematical model of the compressed air engine was established and explored in Matlab. After the validation, the mathematical model was used to analysis the difference between the ideal and actual working process of the compressed air engine. Then, the exergy balance model of compressed air engine was built, and was used to analyze the influences of the main operation parameters on the exergy loss distribution, containing of engine revolving speed, intake pressure and temperature. The simulation results of the analysis showed that there is a big difference between the actual working process and ideal working process of compressed air engine, which lead to a lower actual efficiency than the ideal efficiency. The exergy loss of compressed air engine mainly contains intake loss, heat transfer loss, exhaust loss and friction loss. The intake loss and exhaust loss are the two largest part of compressed air engine loss, which result from intake throttling and high pressure, low temperature gas exhausting, respectively. Added together, the intake loss and exhaust loss account for about 30%-40% of the total intake exergy. The raising of engine revolving speed or the falling of intake temperature both lead to an increase of exergy loss in the intake and exhaust processes, while the raising of the intake pressure leads to an increase of exergy loss in the exhaust process and a decrease of exergy loss in the intake process. From economic considerations, the compressed air engine need to run in low revolving speed with appropriate high intake pressure and temperature. In order to validate the variation trend of compressed air engine exergy efficiency, a test bench of compressed air engine was built. The actual exergy efficiency of compressed air engine under different operation parameters were tested and computed, including revolving speed, intake pressure and temperature. It is shown that the test results well agree with the simulation results, though there is a slight gap between them, which proved the accuracy of the built compressed air engine mathematical model.