Reverse-flow combustors have been used in heavy, land-based gas turbines for many decades. A sheath is typically installed over the external walls of the combustor and transition piece to provide enhanced cooling through hundreds of small impinging cooling jets, followed by a strong forced convection channel flow. However, this cooling is at the expense of a large pressure loss. With the modern advancements in metallurgy and thermal-barrier coating technologies, it may become possible to remove this sheath to recover the pressure loss without causing thermal damage to the combustor chamber and the transition piece walls. However, without the sheath, the flow inside the dump diffuser may exert nonuniformly reduced cooling on the combustion chamber and transition piece walls. The objective of this paper is to investigate the difference in flow pattern, pressure drop, and heat transfer distribution in the dump diffuser and over the outer surface of the combustor with and without a sheath. Both experimental and computational studies are performed and presented in Part 1 and Part 2, respectively. The experiments are conducted under low pressure and temperature laboratory conditions to provide a database to validate the computational model, which is then used to simulate the thermal-flow field surrounding the combustor and transition piece under elevated gas turbine operating conditions. The experimental results show that the pressure loss between the dump diffuser inlet and exit is 1.15% of the total inlet pressure for the non-sheathed case and 1.9% for the sheathed case. This gives a 0.75 percentage point (or 40%) reduction in pressure losses. When the sheath is removed in the laboratory, the maximum increase of surface temperature is about 35%, with an average increase of 13–22% based on the temperature scale of 23 K, which is the difference between the bulk inlet and the outlet temperatures.