The first and second laws of thermodynamics have been employed to evaluate energy and exergetic efficiency of the single effect absorption chiller which is used for air conditioning purpose. The performance analysis has been carried out by developing a computer program in EES and modeling the chiller and its components. To evaluate entropy of the water/lithium bromide solution at any point, an empirical correlation has been utilized. Exergy destruction and thermodynamic properties at any point in the cycle are evaluated by using related equations or build in property data. The results showed that maximum exergy destruction was occurred in the generator and the absorber at various operating conditions and these components had greater effect on the energy and exergetic efficiency rather than condenser and evaporator. Thus, it can be clearly stated that the generator and absorber are the most important components of the absorption chiller. The results also showed the exergetic efficiency was less than the energy efficiency due to exergy destruction taking place within the absorption chiller. Therefore, it can be concluded that the exergy analysis has been proven to be a more powerful tool in pinpointing real losses and can be used as an effective tool in designing an absorption chiller and obtaining optimum operating conditions.