Exergy optimization was used to evaluate milk processing system energy use and identify parameters and/or strategies yielding most effective use of energy quality. Exergy optimization results were then compared with results of energy optimization analysis conducted to minimize the energy use quantity. Although milk cooler, heater, and regenerator energy use efficiencies were near maximum attainable values, exergy analysis provided recommendations which could yield substantial improvements in system exergy performance, particularly minimization of homogenizer pressure drop and maximization of heat exchanger heat transfer coefficients. The analysis also dramatically showed the benefits of considering system, rather than component, energy use in developing energy management strategies.