PEM fuel cells are the ones more heavily studied in comparison to other types of fuel cells because of their several advantages including low temperature operation and quick start-up technologies. There are several factors such as temperature, water content of the membrane, hydrogen/oxygen partial pressure and so on, which affects the power output of PEM fuel cells. Among these, the temperature and water content of the membrane are highly important parameters because they affect the ionic conductivity of the proton exchange membrane thereby leading to significant changes in the power output. This presentation will focus on optimization of power output of a Nafion membrane based PEM fuel cell stack by systematically varying the temperature and humidity of operation. Our recent studies showed that the power output increases with the humidity of operation at high temperatures such as 70 oC, whereas at low temperatures the power output remains almost constant irrespective of the humidity of operation. The effects of all these parameters will be presented in detail.