The vortex chamber is a mechanical device, without any moving parts that separates compressed gas into a high temperature region and a low temperature region. Functionally vortex chamber is similar to a Ranque-Hilsch vortex tube (RVHT), but it is a simpler and compact structure. The objective of the present study is to investigate computationally the physical reasoning behind the energy separation mechanism inside a vortex chamber. A computational analysis has been performed using three-dimensional compressible Navier-Stokes equations. A fully implicit finite volume scheme was used to solve the governing equations. A commercial software ANSYS CFX is used for this purpose. The computational predictions were validated with existing experimental data. The results obtained show that the vortex chamber contains a large free vortex zone and a comparatively smaller forced vortex region. The physical mechanism that causes the heating towards periphery of the vortex chamber is identified as the work done by the viscous force. The cooling at the center may be due to expansion of the flow. The extent of temperature separation greatly depends on the outer diameter of the vortex chamber. A small amount of compression is observed towards the periphery of the vortex chamber when the outer diameter is reduced.