In this paper, we covered the basic design process of water-cooled cabinets and studied how to determine the target performance of heat exchanger design, which is essential in water-cooled cabinet design. A theoretical method was presented to set the target efficiency of the heat exchanger, and the pressure drop of air passing through the heat exchanger was predicted analytically. A cabinet-level thermal analysis was performed using the target efficiency and pressure drop data of the heat exchanger. The accuracy of the theoretical method was judged by comparing the theoretically predicted operating environment of the internal equipment with the analytically predicted operating environment of the internal equipment.