In this article the general operation and performance of heat pipes is being approached from fundamental thermodynamic considerations. This is in contrast to the classic heat pipe design analysis which equates an available ''capillary pressure'' with the two pressure drops associated with the circulation of the working fluid in the vapor and liquid phase and body forces where applicable, and erroneously attributing the circulation of the working fluid in a heat pipe to ''capillary pumping.'' This article shows that the working fluid circulates in a heat pipe as the result of a thermodynamic cycle in which thermal energy is converted to kinetic energy. The basic analysis which is presented, and which can be extended in future research, identifies the total internal temperature difference over which the heat pipe operates and the heat pipe operating temperature as the two key operating parameters in full agreement with all observed heat transfer phenomena. For given physical characteristics of a heat pipe, i.e., length, internal and external diameters, wick, artery or groove structure, the thermal transport performance below its operating limits is shown to be entirely a function of these two parameters as it is for any other heat conductor. The thermodynamic cycle clarifies the often substantial discrepancy between the predicted and the actually realized thermal power transfer capacity of a heat pipe.