The waste heat recovery (WHR) system appears to lower overall fuel consumption of the engine by producing additional power and curtailing greenhouse emissions per unit of power produced. In this project, a 25.5 kW diesel engine is used and simulated, which has an exhaust temperature of about 470°C. During optimization of the heat exchangers, the overall weight of the heat exchangers is kept low to reduce the final cost. Additionally, the overall pressure drops across the superheater, boiler, and economiser are kept at around 200 kPa to expel the exhaust gas into the atmosphere easily. To accomplish high heat-transfer across the heat exchangers, the pinch temperature of the hot and cold fluids is kept above 20°C. In this project, under the design constraints and available heat at the exhaust gases, the WHR system has enhanced the power and reduced the break specific fuel consumption by around 6.2% and 5.8%, respectively at 40 bar pressure. The maximum net power produced is around 1.5 kW at 40 bar steam pressure. All thermodynamic equations have been set up and solved with the help of Engineering Equation Solver (EES) software to meet the manufacturer’s requirements such as the length of heat exchangers, the number of the tubes and rows, and the gap between the tubes, thickness of tubes, and materials. In the last, the cost of all required components is considered. The cost of the entire WHR system is calculated at around $14,220 and the payback period is around 4 years and 5 months.