This paper introduces a new approach for the preliminary design and aerothermal analysis of centrifugal impellers using a relative diffusion effectiveness parameter. The relative diffusion effectiveness is defined as the ratio of the achieved diffusion to the maximum available diffusion in an impeller. It represents the quality of the relative diffusion process in an impeller. This parameter is used to evaluate impeller performance by correlating the relative diffusion effectiveness with the impeller isentropic efficiency using the experimental data acquired on a single-stage centrifugal compressor (SSCC). By including slip, which is appropriate considering it is an inviscid effect that should be included in the determination of maximum available diffusion in the impeller, a linear correlation between impeller efficiency and relative diffusion effectiveness resulted for all operating conditions. Additionally, a new method for impeller preliminary design was introduced using the relative diffusion effectiveness parameter, in which the optimal design is selected to maximize relative diffusion effectiveness. While traditional preliminary design methods are based on empirical loss models or empirical knowledge for selection of diffusion factor (DF) in the impeller, the new method does not require any such models, and it also provides an analytical approach for the selection of DF that gives optimal impeller performance. Validation of the method was performed using three classic impeller designs available in the open literature, and very good agreement was achieved. Furthermore, a sensitivity study shows that the method is robust in that the resulting flow angles at the impeller inlet and exit are insensitive to a wide range of blockage factors and various slip models.