This work describes the energy and exergy analysis of a diesel engine integrated with a PCM based energy storage system, and provides more realistic and meaningful assessment than the conventional energy analysis. Using actual system data, the assessments of energy and exergy saved, and energy and exergy efficiencies are done. The exergy saved in the overall system is quantified and illustrated using an exergy flow diagram. Also, energy and exergy flow diagrams are compared. It is observed through the analysis that 6.13% of the total energy of the fuel is saved using the TES system. From the exergy analysis, it is identified that only 0.47% of the chemical availability of the fuel is saved. The energy efficiency of the integrated system is found to be varying between 3.19% and 34.15%. In contrast, the exergy efficiency, which incorporates the second law of thermodynamics for the integrated system, ranges from 0.25% to 27.41%.