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To effectively reduce building energy consumption, a novel full fresh air system with a heat source tower (HST) and a borehole heat exchanger (BHE) was proposed for space cooling and dehumidification in this paper. The cooling system only adopts geothermal energy to produce dry and cold fresh air for space cooling and dehumidification through the BHE and HST, which has the advantage of non-condensate water compared to BHE systems integrated with a fan coil or chilled beam. Based on the established mathematical model of the cooling system, this paper analyzed the system characteristics, feasibility, operation strategy, energy performance, and cost-effectiveness of the proposed model in detail. The results show that the mathematical model has less than 10% error in estimating the system performance compared to the practical HST-BHE experimental set up. Under the specific boundary conditions, the cooling and dehumidification capacity of this system increases with the decrease in the air temperature, air moisture content, and inlet water temperature of the HST. The optimal cooling capacity and the system COP can be achieved when the air-water flow ratio is at 4:3. A case study was conducted in a residential building in Shenyang with an area of about 1800 m2. It was found that this system can fully meet the cooling and dehumidification demand in such a residential building. The operation strategy of the cooling system can be optimized by adjusting the air-water flow ratio from 4:3 to 3:2 during the early cooling season (7 June-1 July) and end cooling season (3 August-1 September). As a result, the average COP of the cooling system during the whole cooling season can be improved from 6.1 to 8.7. Compared with the air source heat pump (ASHP) and the ground source heat pump (GSHP) for space cooling, the proposed cooling system can achieve an energy saving rate of 123% and 26%, respectively. Considering that the BHE of the GSHP can be part of the proposed HST-BHE cooling system, the integration of the HST and GHSP for space cooling (and heating) is strongly recommended in actual applications.