The objective of this technical paper is to study the effect of optimizing the internal baffle spacing (Lb) on the thermal and hydraulic performance of shell and tube heat exchangers. The thermal effects on the terminal temperatures of both shell and tube sides and heat duty are also studied. The changes in LMTD correction factor (FN) due changing the baffle spacing are also addressed in this report. TEMA is specifying the minimum baffle spacing as one fifth of the shell inside diameter or 50.8 mm, whichever is greater. The maximum unsupported length is one and half (1½) meters for nineteen (19.05) mm outside tube diameter. This specification was investigated in this report. For this purpose, TEMA E (shell) type is used as a base for this study. A broad review of the published literatures was made. Most of the literatures were found dealing with number of baffles (Nb) instead of internal baffle spacing. New equation, results and economical recommendations are obtained from this study