Sugarcane Bagasse is the fibrous residue of sugar cane stalk coming from the mills after crushingrnand extraction of juice. It is used as a fuel for boiler to generate energy. In Wonji/Shoa sugar factoryrna sugarcane bagasse of 52% moisture content which is very high moisture content in history of thernsugar factory is used as a fuel for boilers to generate steam. If the moisture content of bagasse isrnhigh its heat generation capacity or calorific value is lower; indirectly that means the boilerrnefficiency become low, because itâ€™s heating value is reduced and it cause the largest loss in thernboilers due to the moisture carries the latent heat of vaporization up the stack. rnThis study is aimed to reduce this moisture content of sugarcane bagasse and so increase the thermalrnefficiency of boiler for Wonji/Shoa sugar factory. To do that, a Fluidized Bed Bagasse Dryer hasrnbeen designed and the thermal analysis of the system was also carried out by ANSYS Fluent. rnThe Fluidized Bed Bagasse Dryer uses the hot flue gases that comes from boiler to chimney whichrnis optimum solution to enhance thermal efficiency of boiler. In other way, re-using this flue gasesrnfor bagasse drying improves the environmental pollution. The bagasse and the hot flue gases mixedrnin the drying chamber of Fluidized Bed Bagasse Dryer to evaporate the water contained in thernbagasse. Finally, this designed Fluidized Bed Bagasse Dryer enables to reduce bagasse moisturerncontent from 52% to 41% and also increases the efficiency of boiler by 5.5% from 70 to 75.5%rnaccording to the analysis done analytically and using ANSYS Fluent. Both analysis gives almostrnthe same result. In addition, the total cost of the dryer was estimated to be 1,310,136.146 Ethiopianrnbirr. By installing this bagasse dryer, the factory can increases its income by 17,364 Ethiopian birrrnper day and recover this cost within 3.14months.