A detailed three-dimensional (3D) computational fluid dynamics (CFD) model of a direct absorption solar collector (DAC) is presented. Radiative transfer equation (RTE) is coupled with Navier–Stokes equations and solved numerically to predict the collector efficiency. The spectral properties of absorbing liquids are captured using a band-averaged absorption model. This numerical model is validated with experimental data for two different types of absorbing fluids viz., gray (graphite particles in water) and nongray (copper sulfate) fluids. The validated model is used for parametric studies to determine the right design choices for an improved collector. Impact of optical concentration ratio (CR), optical density of the fluid, mass flowrate, and thermal insulation on the collector efficiency were studied. Increase in collector efficiency of up to 28% is seen due to higher optical CRs, which is attributable to good absorption characteristics of the receiver and reduced area for losses. The collector efficiency does not improve with absorption coefficient of the fluid beyond a certain value for a given thickness of the fluid layer. The range of mass flow rates considered in the study was found to have no impact on collector efficiency. Thermal insulation is found to be very effective in minimizing the overall thermal losses and enhancing the collector efficiency. The numerical model presented here may be used to identify optimum CR, absorption coefficient of liquid for a direct absorption concentrating collector.