An investigation was carried out to study the effect of an air-to-air heat pipe heat exchanger on the energy recovery and dehumidification enhancement of the air conditioning system in tropical climates. For this purpose, the performance of a heat pipe heat exchanger, which was experiencing tropical ambient air in its evaporator section and fan coil unit, was monitored during one week of operation (168 hours) to find out the relevant performance characteristic curves. Then, empirical equations, which were extracted from the performance characteristic curves, were employed for the hour-by-hour prediction of energy recovery by the heat pipe heat exchanger and dehumidification for the whole year using TRNSYS software. The investigation showed that the heat pipe heat exchanger can pay for itself in 1.9 years. Moreover, it was shown that the dehumidification capability of the cooling coil can enhance up to 6% with the added heat pipe heat exchanger.