Most work to date on power reduction has focused at the component level, not at the system level. In this paper, we propose a framework for describing the power behavior of system-level designs. The model consists of a set of resources, an environmental workload specification, and a power management policy, which serves as the heart of the system model. We map this model to a simulation-based framework to obtain an estimate of the system's power dissipation, Accompanying this,we propose an algorithm to optimize power management policies, The optimization algorithm can be used in a tight loop with the estimation engine to derive new power-management policy algorithms for a given system-level description, We tested our approach by applying it to a real-life low-power portable design, achieving a power estimation accuracy of similar to 10%, and a 23% reduction in power after policy optimization.