This communication presents finite time thermodynamic analysis of vapour absorption refrigeration system considering both external as well as internal irreversibility. System is considered as consisting of an irreversible heat engine between the generator and absorber and an irreversible refrigerator between the evaporator and condenser. Optimization is made w.r.t. source/sink side heat exchanger areas, source/sink side heat transfer time and heat engine cycle and refrigeration cycle time. An optimal relation between overall coefficient of performance and maximum cooling load is obtained. Two internal irreversibility parameters (say, R Δ S is for generator–absorber assembly and R Δ S ′ is for evaporator–condenser assembly) have been introduced in the analysis, having fractional value for irreversible (real) system while R Δ S = R Δ S ′ = 1.0 corresponds to endoreversible system. A detailed parametric study shows that internal irreversibility parameters have more drastic effect on performance reduction than any other external irreversibility parameter. It is also found that internal irreversibility parameters are being dominant factor for performance reduction but out of these two parameters, internal irreversibility parameter of generator–absorber assembly is more sensitive for performance reduction than the internal irreversibility parameter of evaporator–condenser assembly.