For efficient utilization of low grade energy such as geothermal, solar and hot waste water from factories, an energy conversion system using shape memory alloy (SMA) was investigated. The SMA has potential to take out mechanical energy from a thermal energy of small temperature difference. The thermal characteristics of the SMA such as heat capacity, transformation heat and temperature, and dynamic characteristics between stress and temperature were examined experimentally. The SMA thermal efficiency was calculated using these characteristics. The effects of the temperature of a hot energy source and belt thickness on the performance of a belt type engine which was mainly composed of two pulleys and SMA belt were investigated experimentally. Theoretical analysis of the engine performance was carried out using the stress-temperature relation of SMA, and clarified the effects of strain and hot energy source temperature on the engine performance.