This work was carried out to investigate the effect of drying temperature and residual moisture content on the quality of orange and mandarin peels. The changes in moisture content of citrus peels (CP), drying rate and specific energy consumption at various drying temperature was examined. The test samples were dried in a laboratory scale hot air dryer at a constant air velocity of 1m/s and air temperature in the range of 40–70^oC. The effect of drying temperature and residual moisture content on gross chemical composition, vitamin C, carotenoids and essential oils of citrus peels was studied. Cakes prepared from blendes containing different proportions (0, 10, 15 and 20%) of dried orange and mandarin peels were also evaluated for chemical composition and sensory attributes. The results indicated that, the drying temperature was very effective in removing moisture from citrus peels. The orange peels had the highest drying rate than that of mandarin peels. The time required for drying citrus peels was considerably decreased with the increment in the drying air temperature. The simple exponential equation satisfactorily described the drying behavior of citrus peels as indicated by the higher correlation coefficients. The drying time was decreased by 50% and specific energy consumption decreased by about 28.5% with increasing drying temperature from 40 to70^oC for drying citrus peels. Meanwhile, the optimal drying temperature was 60°C to reach 10±0.2%, w.b, moisture level, which saved energy consumption and reduced drying time as well as decreased the losses of vitamin C, carotenoids and essential oils of citrus peels. In addition, overdrying to reach final moisture level of 5.4±0.2% with drying air temperature of 70^oC increased the losses of vitamin C, carotenoids and essential oils of orange peels by 80.5, 13.5 and 62.5%, while for mandarin peels the losses increased by 77.9, 14.2 and 64.3, respectively compared to fresh samples.  Incorporation 15% of dried orange and mandarin peels in cakes increased dietary fiber by 33.5 and 29.6%, ether extract by 2.9 and 4.6% and ash by 30.6 and 29.0%, respectively, while protein and total carbohydrates contents were slightly decreased. Highly acceptable cakes could be obtained by incorporating 15% of orange and mandarin peels dried to about 10% moisture content and they can be used as value-added food ingredients.