Abstract: A heat exchanger for a furnace flue comprises an outer flue jacket having a plurality of axially parallel exhaust gas passages therethrough. The exhaust gas passage tubes are sealed from the remainder of the interior volume of the jacket by a baffle plate at each end thereof. The outer flue jacket is preferably of the same diameter as the flue pipe in the remainder of the system, e. g., six or eight inches, in order to preclude any requirement for adapters. An inlet pipe and an outlet pipe are affixed to opposite ends of the jacket, at some angle (e. g., normal) thereto. Exhaust gases from the furnace pass through the plurality of pipes within the outer jacket, heating the pipes. Airflow within the jacket and outside the pipes, is warmed by contact with the pipes, and flows from the outlet end to be used for warming the interior of the structure in which the unit is installed.