Abstract: In this paper, a novel system integrating chemical looping hydrogen (CLH) generation and solid oxide fuel cell (SOFC) has been proposed. The new methane-fueled cycle has been investigated with the aid of the exergy analysis. Hydrogen is produced in the CLH, in which FeO and Fe₃O₄ are used as the looping material, to feed the SOFC. Waste heat from the SOFC is utilized in the CLH, and converted to chemical energy through the reduction reaction of CLH. Sensitivity analysis is conducted as well on the basis of exergy balance. Meanwhile, the cycle is environmentally superior because of the recovery of CO₂ without an energy penalty. The new system can achieve 61.2% net efficiency with CO₂ separation, more than 10 percentage points higher than a methane reforming fueled SOFC system. Through the aid of the exergy principle (energy utilization diagram methodology), the cascade utilization of waste heat and the high-efficiency hydrogen production is the main reason of high performance. The Promising results obtained here indicate that this novel thermal cycle is a promising approach to accomplish the efficient utilization of chemical energy of methane without decrease in thermal efficiency for CO₂ removal.