SYNOPSIS In this paper, the power density, defined as the ratio of power output to the maximum specific volume in the cycle, is taken as the objective for performance analysis of an irreversible closed Brayton cycle coupled to variable-temperature heat reservoirs with reference to finite time thermodynamics (FTT) or entropy generation minimisation (EGM). The analytical formulae describing the relations between power density and pressure ratio are derived with the heat resistance losses in the hot- and cold-side heat exchangers, the irreversible compression and expansion losses in the compressor and turbine, and the effect of the finite thermal capacity rate of the heat reservoirs. When the heat transfers between the working fluid and the heat reservoirs are carried out ideally and the thermal capacity rates of the heat reservoirs are infinite, this paper confirms those results obtained in recent literature. The obtained results are also compared with those results obtained by using the maximum power criterion. The influences of some design parameters, including the temperature ratio of the heat reservoirs, the effectivenesses of the heat exchangers between the working fluid and the heat reservoirs and the efficiencies of the compressor and the turbine, on the maximum power density are provided by numerical examples, and the advantages and disadvantages of maximum power density design are analysed. The maximum power density optimisation is performed in two aspects. The first is to identify the optimum heat conductance distribution corresponding to the optimum power density of the hot- and cold- side heat exchangers for the fixed heat exchanger inventory. The second is to identify the optimum thermal capacitance rate corresponding to the optimum power density between the working fluid and the high-temperature heat source for a fixed ratio of the thermal capacitance rates of two heat reservoirs. The influence of some design parameters, including the temperature ratio of the heat reservoirs, the heat exchanger inventory between the working fluid and the heat reservoirs and the efficiencies of the compressor and the turbine, on the optimum heat conductance distribution, the optimum thermal capacitance rate corresponding, the maximum power density, and the corresponding optimum pressure ratio, are provided. The power plant design with optimisation leads to a higher efficiency and smaller size including the compressor, turbine, and the hot- and cold-side heat exchangers.