Thermal systems, which are based on heat and mass transfer, fluid flow and thermodynamics, arise in a wide variety of applications. It has become critical to optimize thermal processes in order to reduce energy consumption and the environmental effect, while increasing the productivity and product quality. This paper discusses the optimization of thermal systems in order to achieve the best output with respect to energy and the environment. Systems from several important application areas, such as manufacturing, thermal management of electronics, and heat rejection are considered. These systems are generally quite complex due to variable material properties, uncertainties, combined transport mechanisms, complex domains and boundary conditions, and multiscale phenomena. Therefore, the modelling and simulation of these systems is quite involved and considerable care is needed to obtain accurate results. Simulation results, along with experimental data, are used for prediction of the behaviour of systems, as well as their design and optimization. The paper focuses on the reduction in energy and material consumption and the environmental effect. However, it is also important to enhance the output and improve the quality of the product obtained. The important aspects that must be considered and the approaches that may be adopted are discussed in detail. In most practical situations, several objectives are of interest and multi-objective design optimization is necessary. Results for a few important systems are presented in order to illustrate the basic approach.