The objective of this paper is to perform the exergy and exergo–economic analysis of Isfahan steam power plant. A simulation program is used for modelling the Isfahan steam power plant in Iran. The exergy balance is used to estimate the exergy destruction in each component of the plant. Moreover, the cost balance equations are solved to determine the cost of exergy destruction in each part of the Isfahan STPP. The highest exergy destruction has mainly occurred in boiler and preheater1&condenser by almost 360.65 MW and 38.81 MW, respectively. In addition, the cost destruction for boiler is about 15090.8 US$/h and for preheater1&condenser is 6056.57 US$/h. Furthermore, the effect of key parameters such as the main steam temperature, reheated steam temperature, condenser pressure and number of the feed water heaters on the cycle performance as well as the final cost of electricity is determined. In particular, by decreasing the condenser, pressure from 0.7 to 0.05 bar the final cost of electricity increases from 7.81 US$/GJ to 9.87 US$/GJ. Accordingly, by increasing the number of the feed water heaters from none to 6, the electricity price will decrease from 19.53 US$/GJ to 8.89 US$/GJ.