A fossil fuel power station is a thermal power station that burns fossil fuel, such as coal, oil, or natural gas, to produce electricity. Fossil fuel power stations have machines that convert the heat energy of combustion into mechanical energy, which then powers an electrical generator. The prime mover may be a steam turbine, a gas turbine or, in small plants, a reciprocating gas engine. All plants use the energy extracted from the expansion of a hot gas, either steam or combustion gases. Although different energy conversion methods exist, all thermal power station conversion methods have their efficiency limited by the Carnot efficiency and therefore produce waste heat.

Fossil fuel power stations provide most of the electrical energy used in the world. Some fossil-fired power stations are designed for continuous operation as baseload power plants, while others are used as peaker plants. However, starting from the 2010s, in many countries plants designed for baseload supply are being operated as dispatchable generation to balance increasing generation by variable renewable energy.

By-products of fossil fuel power plant operation must be considered in their design and operation. Flue gas from combustion of the fossil fuels contains carbon dioxide and water vapor, as well as pollutants such as nitrogen oxides (NO_x), sulfur oxides (SO_x), and, for coal-fired plants, mercury, traces of other metals, and fly ash. Usually all of the carbon dioxide and some of the other pollution is discharged to the air. Solid waste ash from coal-fired boilers must also be removed.

Fossil fueled power stations are major emitters of carbon dioxide (CO₂), a greenhouse gas which is a major contributor to global warming. The results of a recent study show that the net income available to shareholders of large companies could see a significant reduction from the greenhouse gas emissions liability related to only natural disasters in the United States from a single coal-fired power plant. However, as of 2015, no such cases have awarded damages in the United States. Per unit of electric energy, brown coal emits nearly twice as much CO₂ as natural gas, and black coal emits somewhat less than brown. As of 2019^[update], carbon capture and storage of emissions is not economically viable for fossil fuel power stations, and keeping global warming below 1.5 °C is still possible but only if no more fossil fuel power plants are built and some existing fossil fuel power plants are shut down early, together with other measures such as reforestation.

In a fossil fuel power plant the chemical energy stored in fossil fuels such as coal, fuel oil, natural gas or oil shale and oxygen of the air is converted successively into thermal energy, mechanical energy and, finally, electrical energy. Each fossil fuel power plant is a complex, custom-designed system. Multiple generating units may be built at a single site for more efficient use of land, natural resources and labor. Most thermal power stations in the world use fossil fuel, outnumbering nuclear, geothermal, biomass, or concentrated solar power plants.

The second law of thermodynamics states that any closed-loop cycle can only convert a fraction of the heat produced during combustion into mechanical work. The rest of the heat, called waste heat, must be released into a cooler environment during the return portion of the cycle. The fraction of heat released into a cooler medium must be equal or larger than the ratio of absolute temperatures of the cooling system (environment) and the heat source (combustion furnace). Raising the furnace temperature improves the efficiency but complicates the design, primarily by the selection of alloys used for construction, making the furnace more expensive. The waste heat cannot be converted into mechanical energy without a cooler cooling system. However, it may be used in cogeneration plants to heat buildings, produce hot water, or to heat materials on an industrial scale, such as in some oil refineries, plants, and chemical synthesis plants.

Typical thermal efficiency for utility-scale electrical generators is around 37% for coal and oil-fired plants, and 56 – 60% (LEV) for combined-cycle gas-fired plants. Plants designed to achieve peak efficiency while operating at capacity will be less efficient when operating off-design (i.e. temperatures too low.)

Practical fossil fuels stations operating as heat engines cannot exceed the Carnot cycle limit for conversion of heat energy into useful work. Fuel cells do not have the same thermodynamic limits as they are not heat engines.