This paper describes the development and modeling of anode-supported intermediate-temperature solid oxide fuel cells (ACN-AS-IT-SOFC) that exhibit high electrochemical efficiency, high degree of fuel utilization, and low operating temperature characteristics. The proposed cell design is fuelled by hydrogen or in-situ reformed fuel and operates at a lower temperature of 600-800°C producing a maximum power density of 2-2.2 W/cm2. The innovative design for the ACN-AS-IT-SOFC fuel cell makes use of a porous anode consisting of a combination of a highly conductive anode capillary network (ACN) running through the supporting anode manufactured using MER poly capillary material technology. The highly porous anode allows for free fuel gas access to the functional anode. Operating at low temperature of 600-800°C it allows the use of less expensive interconnect materials such as ferritic steels. A method to identify over-potentials caused by different polarizations in an SOFC with multi-layer hybrid electrodes is also presented. The contributions of each polarization to the total loss in a fuel cell can be identified. The polarization causing the maximum over-potential is then considered as the primary source of internal losses, and optimization is focused to improve the power density. The analysis for the mass transfer polarization considers bulk convection and diffusion in porous layers from bulk flow to the interface of the electrode and electrolyte. Values of the exchange current densities are determined empirically by matching analytical and experimental results. Effects of porosities and thicknesses of anode, cathode, and functional graded layers are modeled and optimized to attain maximum power density.