A combined thermal and flow analysis was carried out to study the behavior and performance of a simple, commercial LTD (low-temperature-differential) heat engine. Laminar-flow solutions for annulus and channel flows were employed to estimate the viscous drags on the piston and the displacer, and the pressure difference across the displacer. Temperature correction factors were introduced in the thermal analysis to account for the departures from the ideal heat transfer processes. The flow analysis results indicate that the work required to overcome the viscous drags on engine moving parts is very small for engine speeds below 10 RPS (revolutions per second). The work required to move the displacer due to the pressure difference across the displacer is also one-to-two orders of magnitude smaller than the moving-boundary work of the piston for temperature differentials in the neighborhood of 20 °C and engine speeds below 10 RPS. A comparison with experimental data reveals large degradations from the ideal heat transfer processes inside the engine.