An internally irreversible Ericsson engine, with a realistic regenerator, has been analyzed. The study considers internal irreversibilities with the introduction of turbine and compressor thermal-efficiencies and pressure-drops present in realistic regenerators. The effects of internal irreversibilities on the power output and thermal efficiency of the cycle have been determined using the finite-time thermodynamics. Maximum power-density, rather than maximum power, was used as the criterion for optimization, with the objective of having a more efficient small-sized engine. (C) 1999 Elsevier Science Ltd. All rights reserved.