Factors such as low capital cost, good match of power and heat requirements and proven reliability can sometimes lead an end user into purchasing gas turbines for use in a modern cogeneration plant. The steam-injected gas turbine is an attractive electrical generating technology for mitigating the impacts of rising energy prices. According to such mentioned above this paper is to provide results of an optimization study on cogeneration power cycle, which works by gas turbine with recuperator and injection steam added to the combustor of the gas turbine. The performance characteristics of the cycle based on energy and exergy concepts and based upon practical performance constraints were investigated. The effect of the recuperator on the cycle was greatly clarified. Results also show that the output power of a gas turbine increases when steam is injected. When extra steam has to be generated in order to be able to inject steam and at the same time to provide for a given heat demand, power generating efficiency increases but cogeneration efficiency decreases with the increasing of injected steam. Copyright (C) 2004 John Wiley Sons, Ltd.