Fossil fuel power plants can cause numerous environmental issues, owing to exhaust emissions and substantial water consumption. In a thermal power plant, heat and water recovery from flue gas can reduce CO2 emissions and water demand. High-humidity flue gas averts the diffusion of pollutants, enhances the secondary transformation of air pollutants, and leads to smog weather; hence, water recovery from flue gas can also help to lessen the incidence of white plumes and smog near and around the power plant. In this study, a lab-scale system for heat and water recovery from flue gas was tested. The flue gas was initially cooled by an organic Rankine cycle (ORC) system to produce power. This gas was further cooled by an aftercooler, using the same working fluid to condense the water and condensable particulate matter in the flue gas. The ORC system can produce approximately 220 W of additional power from flue gas at 140 °C, with a thermal efficiency of 10%. By cooling the flue gas below 30–40 °C, the aftercooler can recover 60% of the water in it.