An optimization of loss models for performance prediction of centrifugal compressors has been conducted in this paper. A centrifugal compressor with vaneless diffuser (VLD) and vaned diffuser (VD) is selected for the present study. The study begins with a numerical analysis, using commercial software ANSYS CFX. The numerical result is used to modify mean streamline analysis loss models. Matlab optimization toolbox is used for this purpose. Also, a matlab program is compiled to calculate the off-design performance of the centrifugal compressor. The results show that after optimizating the loss models, mean streamline analysis has a better accuracy than before.