The engine coolant temperature influences fuel consumption, power, emissions and mechanical load on the components. The optimization of these variables does not permit a fixed temperature value if there are different speed and load states. The optimization requires a temperature range that corresponds to each operating point. A conventional wax thermostat has a wide temperature control range. The start to open and full open temperature values depend on the mechanical properties of the spring and wax material. Hence, there is no control on the coolant temperature band in real time.This paper deals with the performance analysis & optimization of engine cooling system by using electronically controlled coolant thermostat for improving engine thermal efficiency. To integrate this technology with an existing engine, some design modifications have been made in the thermostat housing mounted on the engine cylinder head and radiator inlet hosepipe. An electronic control unit was developed & programmed in-house to control thermostat variable opening with respect to coolant temperature.The system has been evaluated on a vehicle to analyze the effect of raising engine operating temperature on engine performance and cooling system. Results show good improvement in fuel efficiency and engine emission.