This study deals with an energy and exergy analysis of Salihli geothermal district heating system (SGDHS) in Manisa, Turkey. In the analysis, actual system data are used to assess the district heating system performance, energy and exergy efficiencies, specific exergy index, exergetic improvement potential and exergy losses. Energy and exergy losses throughout the SGDHS are quantified and illustrated in the flow diagram. The exergy losses in the system, particularly due to the fluid flow, take place in the pumps and the heat exchanger, as well as the exergy losses of the thermal water (e.g. geothermal fluid) and the natural direct discharge of the system. As a result, the total exergy losses account for 2.22, 17.88 and 20.44%, respectively, of the total exergy input to the entire SGDHS. The overall energy and exergy efficiencies of the SGDHS components are also studied to evaluate their individual performances and determined to be 55.5 and 59.4%, respectively. Copyright © 2005 John Wiley & Sons, Ltd.