The operating range of any compressor is controlled by Surge and Choke. Surge occurs at lower mass flow rates with large pressure fluctuations and flow reversals, while choke occurs at higher mass flow rates when the flow rate reaches the limit which compressor can discharge. Ported shroud is a cost effective casing treatment that can greatly improve operating range of centrifugal compressors. By removing the stagnant and reverse flow from shroud wall boundary-layer region and recirculating it to impeller inlet, it has been demonstrated that larger range of operability can be achieved without much loss on compressor efficiency. This paper demonstrates the improvement of a centrifugal compressor operational range with ported shroud configuration.A series of CFD simulations were carried out with open source centrifugal compressor geometry (NASA HPCC 4:1) to create performance characteristics/speed-lines. The CFD methodology and practices were validated by comparing the results with the experimental data. Performance evaluation of ported shroud configuration is done with respect to solid shroud.Ported shroud compressor is proven to give higher choke mass flow and also a better surge margin compared to the Solid shroud model. The phenomena of in-flowing and outflowing port have also been demonstrated. Emphasis was given to understand how ported shroud helps to achieve a better performance. A design optimization study has also been carried out in order to establish the optimum ported shroud configuration. Design parameter such as port location has been selected and the effect of this parameter on the performance of the compressor is studied using CFD. Optimum port geometry was proposed.