The use of diesel-powered engine generators as a power source is very common for various industrial and residential applications. There are strict regulatory requirements and legislations to limit the noise levels from these generators below statutory limits. The purpose of the paper is to present an approach using statistical energy analysis (SEA) augmented by experimental inputs for the prediction of noise levels for the generators and propose strategies for optimized enclosure design that effectively mitigate noise to achieve regulatory requirements. The study begins by developing an SEA model that represents the acoustic behavior of the generator and enclosure. The airborne sources such as engine, alternator, radiator fan and exhaust are modelled explicitly using experimental noise source characterization. Based on the established SEA model and excitation sources, noise levels are predicted through the calculation of energy flow between subsystems. The predicted sound levels for an existing Diesel Generator with enclosure were validated with its test data to ensure correctness of SEA model. Parametric studies were carried out using simulations on key variables, including critical noise paths, panel thickness, and noise control treatments. These investigations helped identify optimal process parameters that reduce noise levels emitted by genset in adherence to noise regulations.