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This paper presents a novel schematic diagram of a multi-functional air-conditioner (NMFAC) with four operating modes to enhance energy efficiency and increase equipment utilization. A prototype was designed to test the performances according to Chinese condition standards. The results indicated that the NMFAC could run reliably all year round. In summer and winter, the space cooling and heating capacity were in normal ranges, with an average space cooling performance (COPsc) and heating performance (COPsh) of 2.73 and 3.58, respectively. In the water-heating only mode in season and out of season, the mean water heating performance (COPwh) varied from 2.97 to 4.2 under typical conditions as hot water was heated from 15 °C to 55 °C. In condensing heat recovery mode, the average COPwh and COPsc were 4.54 and 4.30, respectively, and the overall performance (COPcw) was up to 8.84.