The effect of 15% pinched diffuser in a centrifugal air compressor with a cascade airfoil diffuser on the aerodynamic performance is investigated using a numerical approach. The commercial CFD code for three-dimensional, turbulent, compressible flow fields is executed for various mass flow rates at a design speed which can be obtained as long as the calculation succeeds. The pinched diffuser is found to help improve the instability of flow within vaneless diffuser space, especially the reverse flow near shroud, and to change both stall/surge line and choking line to increase the surge margin. It is also found to generate more favorable increase of static pressure in diffuser region, and to increase the resulting pressure ratio and efficiency.