Ground heat exchanger (GHE) uses the earth as a heat source or a heat sink to extract or reject geothermal energy. Modeling of heat transfer in a vertical U-shaped ground heat exchanger is investigated. A model of transient 2-D natural convection from a vertical cylinder embedded in a semi-infinite porous medium is developed to simulate the heat transfer process from the vertical GHE borehole to the surrounding soil. This model takes into consideration the thermal and hydraulic properties of the soil formation and all other geometrical and operating conditions. A steady-state 2-D conduction model is developed to simulate the heat transfer process inside the borehole region (including GHE pipes and grout) and correlations for the local and effective borehole thermal resistances are obtained. A computational model for simulating the GHE performance is developed and verified using the results obtained from an experimental study. The experimental work includes installation of a full scale vertical U-shaped GHE and the measurements are carried out using a mobile thermal response test facility. The computational model takes into considerations the geological nature of the GHE location and all parameters affecting the performance of the GHE. On the basis of the current approach, a sizing procedure is suggested produced a considerable difference in the GHE length (size) in comparison with the traditional approaches that are based on pure conduction in the surrounding soil. The difference may reach 55% at high values of soil permeability. This in turn strongly influences the initial and running costs of the geothermal system and its competitiveness with conventional ones