This paper proposes physics-based simulation combined multi-objective optimization approach for reduction of both capacity decay and voltage loss of Vanadium redox flow battery. In this approach, firstly, a physics-based-electrochemical model for a single-cell VRFB is developed based on the dynamic plug flow reactor model and is used to obtain capacity decay and voltage loss under various conditions. Simulation studies were then conducted to investigate the effects of electrolyte flow rate and electrode fiber diameter on the VRFB performance. The capacity decay in VRFB relies mainly on the vanadium ions’ variation between two half-cells. The variation in the long-term cycle is fundamentally due to the electrolyte transfer across the membrane. The lower electrolyte flow rate, as well as electrode fiber diameter, can reduce the capacity decay as the electrolyte’s velocity across the membrane decreases. However, the lower electrolyte flow rate and electrode fiber diameter increase the voltage loss considering open circuit voltage loss, activation overpotential, and concentration overpotential. Finally, a novel optimization framework combined with simulation and the meta-heuristic algorithm is introduced to reduce both capacity decay and voltage loss in VRFB simultaneously. The proposed multi-objective method shows a significant reduction of both capacity decay and voltage loss.