Reverse flow can annular combustor configuration becomes the inevitable option for industrial and marine gas turbine engine, due to its advantages over other configurations. The complexity associated with can annular configuration is optimum design of annular diffuser, as its flow field is dominated by downstream blockage created by transition duct geometry. In the present study, flow behavior in the annular diffuser has been analyzed by simulating realistic downstream combustor liner and transition duct geometry. Flow analysis has been carried out using ANSYS Fluent and turbulence has been modeled using Realizable k-ε model. The diffuser is designed based on G* method, for optimum pressure recovery. Six diffuser configurations have been analyzed by varying the inner wall profile. The effect of parameters on flow field within diffuser and dump region has been studied. Also, the static pressure recovery and total pressure loss coefficient of diffuser is calculated and compared. The results show that the profile of the inner wall and the dump region needs to be tailored to get optimum performance from diffuser.