A Direct Method for Optimization (DMO) is developed for investigating pressure rise and energy loss in a vaneless diffuser of a generic compressor used in shipboard airconditioning systems. The scheme uses Reynolds-Averaged Navier–Stokes (RANS) results and evaluates gradients of a predetermined objective function. The current Direct Method for Optimization differs from the popular Inverse Design Method in the process of obtaining final configurations and in the final configurations obtained. The Direct Method for Optimization achieves a final shape from maximizing/minimizing a nonlinear function, i.e., the objective function. Both gradient and nongradient Direct Methods for Optimization are compared with respect to accuracy and efficiency. The coupled DMO/RANS optimization code is benchmarked using a plane turbulent diffuser also investigated by Zhang et al. using an adjoint method. The benchmark indicates that if a global optimum exists, the result should be independent of the methodologies or design parameters used. The DMO/RANS method is applied to redesign a three-dimensional centrifugal vaneless diffuser used in a modern generic compressor. The objective function is a composite function of the diffuser’s pressure rise and total energy loss. The new optimum diffuser has a minimum width at a location far beyond the conventional diffuser pinch point. The new diffuser also provides an efficient section for pressure recovery, which takes place after the minimum width location. Test data for the new diffuser validate the current approach at the design condition. Furthermore, improved performance is also recorded experimentally at off-design conditions for the optimized diffuser.