Design of microchannel heat exchanger can be accomplished by various methods available. Most of these methods do not take into consideration the second law of thermodynamics. In view of this, study of microchannel from perspective of exergetic analysis is important for the design and evaluation of thermodynamic system in which it is being employed. The global efficiency of a thermodynamic system can be improved by a good exergetic design of microchannel heat exchanger. This can be achieved by defining a thermodynamic system in which the exergetic losses would be eliminated and limited only to unavoidable losses. Identifying probable sources of exergy loss and possibly reducing them needs a full exergetic analysis of an existing heat exchanger. This study takes into consideration the exergetic losses which would be helpful in thermal design of the heat exchanger.