Desiccant based air conditioning systems are a suitable way to improve indoor air quality due to its superior humidity control. In this study, a novel desiccant based air conditioning system is designed and tested experimentally to improve the indoor air quality and reduce energy consumption. In the system studied, a heat exchanger, which is not used in this type of systems, for pre-heating the regeneration air with exhaust air is used. This paper reports results of initial operation and operational procedures. The performance of the system and its components is discussed.