A decomposition methodology based on the concept of "thermoeconomic isolation" applied to the synthesis/design and operational optimization of an advanced tactical fighter aircraft is the focus of this research. Conceptual, time, and physical decomposition were used to solve the system-level as well as unit-level optimization problems. The total system was decomposed into five sub-systems as follows: propulsion sub-system (PS), environmental control sub-system (ECS), fuel loop sub-system (FLS), vapor compressor and PAO loops sub-system (VC/PAOS), and airframe sub-system (AFS) of which the AFS is a non-energy based sub-system. Configurational optimization was applied. Thus, a number of different configurations for each sub-system were considered. The most promising set of candidate configurations, based on both an energy integration analysis and aerodynamic performance, were developed and detailed thermodynamic, geometric, physical, and aerodynamic models at both design and off-design were formulated and implemented. A decomposition strategy called Iterative Local-Global Optimization (ILGO) developed by Muñoz and von Spakovsky was then applied to the synthesis/design and operational optimization of the advanced tactical fighter aircraft. This decomposition strategy is the first to successfully closely approach the theoretical condition of "thermoeconomic isolation" when applied to highly complex, highly dynamic non-linear systems. This contrasts with past attempts to approach this condition, all of which were applied to very simple systems under very special and restricted conditions such as those requiring linearity in the models and strictly local decision variables. This is a major advance in decomposition and has now been successfully applied to a number of highly complex and dynamic transportation and stationary systems. This thesis work presents the detailed results from one such application, which additionally considers a non-energy based sub-system (AFS). / Master of Science