Carnot Engine is an idealised engine, which if operated between two given source and sink temperatures T₁ and T₂ respectively would have the maximum efficiency.

The Carnot cycle consists of the following four processes-

I. Isothermal expansion - In this step heat is absorbed isothermally from source at temperature T₁.

II. Adiabatic expansion- In this step the gas is expanded adiabatically and taken from temperature T₁ to T₂.

III. Isothermal compression- In this the heat is rejected isothermally to sink at temperature T₂.

IV. Adiabatic compression - In this step the gas is compressed adiabatically and taken back from temperature T₂ to T₁.