A nodal analysis method for thermodynamic analysis of Stirling engine is modified based on the check of mechanical loss and the temperature of the heater and cooler. A computational modeling for simulating the process of oscillating flow and heat transfer occurring in the P-40 four-cylinder double-acting Stirling engine has been developed, and the changing effects of different parameters such as the internal pressure, temperature, velocity, power and efficiency are obtained. Numerical simulation results show that they coincide with the testing data given by NASA. The influence of speed, working fluid and average pressure on the engine output performance is analyzed by the modified nodal analysis method. This method is a useful tool for the optimal design and operating characteristic analysis of Stirling engine.