An exergitic-based analysis of methane (CH4) conventional and flameless combustion in a lab-scale furnace is performed to determine the rate of pollutant formation and the effective potential of a given amount of fuel in the various combustion modes. The effects of inlet air temperature on exergy efficiency and pollutant formation of conventional combustion in various equivalence ratios are analyzed. The rate of exergy destruction in different conditions of flameless combustion (various equivalence ratios, oxygen concentration in the oxidizer and the effects of diluent) are computed using three-dimensional (3D) computational fluid dynamic (CFD). Fuel consumption reduction and exergy efficiency augmentation are the main positive consequences of using preheated air temperature in conventional combustion, however pollutants especially NOx formation increases dramatically. Low and moderate temperature inside the chamber conducts the flameless combustion system to low level pollutant formation. Fuel consumption and exergy destruction reduce drastically in flameless mode in comparison with conventional combustion. Exergy efficiency of conventional and flameless mode is 75% and 88% respectively in stoichiometric combustion. When CO2 is used for dilution of oxidizer, chemical exergy increases due to high CO2 concentration in the combustion products and exergy efficiency reduces around 2% compared to dilution with nitrogen (N-2). Since the rate of irreversibilities in combustion systems is very high in combined heat and power (CHP) generation and other industries, application of flameless combustion could be effective in terms of pollutant formation mitigation and exergy efficiency augmentation. (C) 2014 Elsevier Ltd. All rights reserved.