An investigation of the best ways to achieve optimal performance from a waste-heat-driven ammonia–water absorption heat pump over a wide range of operating conditions is presented. Waste heat from an 8-kWe diesel engine generator is recovered using an exhaust gas heat exchanger and delivered to the desorber by a heat transfer fluid loop. The absorber and condenser are hydronically coupled in parallel to an ambient heat exchanger for heat rejection. The evaporator provides chilled water for space-conditioning with a baseline cooling capacity of 2 kW. All heat and mass exchangers employ novel microscale geometries. A detailed thermodynamics model is developed to simulate performance and develop strategies to achieve the best performance in both cooling and heating modes over a range of operating conditions. These parametric studies show that improved coefficients of performance can be achieved by adjusting the coupling fluid temperatures in the evaporator and the condenser/absorber as the ambient temperature varies. With the varying return temperatures, the system is able to provide the 2-kW design cooling capacity for a wide range of ambient temperatures.