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Heat pumps below five tons are ubiquitous. Such heat pumps are usually equipped with constant speed compressors and blowers. The issues with using a constant speed heat pump include unsatisfactory humidity control, fluctuations in room temperature, compressor short cycling, noise, and high energy demand and consumption. This paper presents a new technology that addresses the common issues and improves the energy performance of a heat pump. The technology is called the Heat Pump Optimizer. The Optimizer consists of a controller, a temperature sensor, and a variable frequency drive. It varies the compressor and indoor fan capacities with the air conditioning system loads. This solves the inherent heat pump issues caused by oversized heat pumps without affecting a user's ability to control room temperature. The technology has been applied in four water source heat pumps in a dormitory building. The heat pumps have been running with optimizers for seventeen months. As shown by the data, with the use of Optimizer, indoor comfort is greatly improved, the number of compressor cycles is reduced by up to 70%, the noise level is reduced by 50%, and the electricity demand and consumption are reduced by up to 50%.