This paper reports on the use of CFD-based exergy calculation procedure in the multi-disciplinary design and optimization of a complete aircraft system. The procedure is a multi-level one which is based on physical decomposition of the overall system into various sub-systems and utilizes the iterative local/global optimization procedure for system level optimization to avoid the implicit nesting of optimization loops. The procedure thus allows each subsystem to be modeled to a level of detail desired at the subsystem level. Formulation of the CFD-based exergy calculation and results are presented, as is the procedure for both single point and multi-point optimization of the air-frame subsystem of the aircraft. Results from CFD-based modeling are further compared with those from traditional methods based on empirical formulation.