In the present study, CFD-based parametric analysis is carried out to optimise the parameters affecting the temperature drop and heat transfer rate achieved from earth air tunnel heat exchanger (EATHE) system. ANSYS FLUENT 15.0 is used for CFD analysis, and k-ε model and energy equation were considered to define the turbulence and heat transfer phenomena. For a straight EATHE system configuration, four design and operating parameters, i.e., diameter of the pipe (A), length of pipe (B), inlet air velocity (C), and inlet air temperature (D), are considered at four different levels in Taguchi method. The Taguchi method is used to obtain maximum air temperature drop and heat transfer rate. The best combination of parameters for achieving a maximum drop in air temperature is A1B4C1D4 and that for obtaining maximum total heat transfer rate is A4B4C4D4. Statistical analysis reveals the percentage contribution of different factors for air temperature drop in the following order: inlet air temperature (57.80%), diameter of pipe (20.66%), length of pipe (12.03%), and air velocity (9.51%), while, for heat transfer rate, pipe diameter (53.28%), inlet air temperature (30.87%), air velocity (9.40%), and length of pipe (6.45%). [ABSTRACT FROM AUTHOR]