Nowadays, both military and public agencies are concerned with the remote detection of toxic gases and chemical warfare agents in the atmosphere. A promising method for the remote detection of such harmful chemicals in the atmosphere is Differential Absorption Lidar (DIAL). In the current paper, system design analysis has been carried out to build a DIAL system for the detection of toxic chemical warfare agents, chemical warfare simulants, explosive precursors, and pollutants. The proposed DIAL system comprises an Optical Parametric Oscillator (OPO) based tuneable laser, a 203 mm diameter Cassegrain telescope, a TE-cooled MCT detector, suitable data acquisition hardware, etc. The DIAL output parameters like return signals, SNR, and minimum measurable concentrations have been simulated under different weather conditions such as clear sky, moderately hazy sky, and hazy atmospheric conditions for given system input parameters (pulse energy, detectivity, bandwidth, DAQ resolution, etc.). We have considered chemicals such as Sarin, Thiodiglycol (TDG), acetone, and methane to be detected using the system. Analysis has been carried out for these chemicals present at different locations with varying concentrations. Our analysis reveals that the DIAL system with a laser transmitter of 5 mJ energy and 203 mm receiver telescope is capable of detecting a few ppm concentrations of toxic chemicals present anywhere between the ranges from a few tens of meters to 2 km with topographic target present. The sensitivity of the system in terms of minimum detectable concentrations for the considered chemicals is also estimated for different atmospheric conditions. It is seen that the minimum detectable concentration of TDG is 3.2 ppm in clear weather conditions which increases to 9.2 ppm under a hazy atmosphere. A similar analysis has been carried out for other toxic chemicals and has been discussed in the paper.