A third-order simulation model of a Vuilleumier{VM) heat pump has been developed. This model takes into account the major losses such as the heat conduction losses through regenerators and displacers, the pumping losses and the wall-to-gas heat transfer losses in active volumes, in addition to the heat exchanger and regenerator losses. The working volume was divided into 12 control volumes and the conservation equations of mass and energy were applied to each control volume. Pressure drops were considered in regenerators only. Thermodynamic behavior of the working gas in a VM heat pump was investigated and effects of the major losses and operating conditions on the performance of a VM heat pump were shown.