Thermoelectric air-conditioners (TEACs) are becoming much concerned due to their many advantages, but the low COPs limit their broad applications. The two key factors to raise the CON of TEACs are both the improvement of thermoelectric materials and the optimum design of hot side heat sinks. This paper provides a thermoelectric air-conditioning system with a water-cooled sleeve heat sink in the hot side of the thermoelectric pellets, and compares the overall heat transfer rates q(L), the total heat resistances R-t between the water-cooled and air-cooled heat sinks as well as the optimum fin length, the optimum fluid flow velocity and the optimum fin gap distance. The simulation results show that the overall heat transfer rate of water-cooled heat sink is more than 20 times that of air-cooled heat sink under the other same circumstances, as a result of the improvement of heat sink.. the optimum COP of the thermoelectric air-conditioning system with the water-cooled heat sink proximately doubles that with the air-cooled heat sink. This novel system could be simply installed and applied all the year round for cooling in summer and heating in winter. Copyright (c) 2005 John Wiley & Sons, Ltd.