Design and fabrication of a high efficiency direct thermal energy conversion system to electrical energy have been of great importance. The alkali metal thermal-to-electric converter (AMTEC) without any mechanical means is a promising compact system for directly converting thermal energy to electrical energy. However, various irreversible losses are among the most important challenges that the AMTEC system designers face to improve the system performance. This paper intends to numerically address the issue of system losses and irreversibility by energy and exergy analysis of each component of the system. A thermal and electrochemical coupled numerical model is developed to study the system performance in terms of energy and exergy. The effects of evaporator and condenser temperatures, dimensionless morphology factor, charge-exchange coefficient, electrolyte thickness, contact resistance, temperature margin, and configuration factor on the energy, exergy efficiency, and exergy destruction are investigated and discussed. The results show that increasing the evaporator temperature from 913 to 1213 K augments the maximum energy and exergy efficiency 84.5 and 64.7%, respectively. Reducing the condenser temperature down to 556 K increases the energy efficiency and exergy. It has been demonstrated that energy losses and exergy destruction mainly occur in the condenser. About 80% of the input heating energy is lost to the ambient from the condenser while the exergy destruction is 40% of the input exergy. However, it should be paying attention that reducing the loss in condenser with temperature reduction cost parasitic losses as well as concentration overpotential losses. Thus using hybrid systems is suggested to manage the exergy destruction and energy losses.