Teradata is a high-performance database system. It uses spool space to perform queries on the database. It writes the result from each step in the query execution plan to disk to a spool file and subsequently reading these results. Hence it is important to plan spool space utilization in an optimized way, else we will end up with spool space error. Spool space and capacity planning are mutually dependent concepts. It is important to increase the system's performance without making any hardware changes. It is the challenge as data is continuously increasing and most systems will respond to increased load with some degree of decreasing performance. Considering the importance a lot of work has been done all over the world on DWH performance tuning, it is critical to understand multiple facts to be considered to ensure optimal utilization of Teradata Spool Space. If we are using the Spool Space in an optimal way then we are increasing the system performance without causing any additional cost to an organization. Poor planning will result out of spool space memory and hence can lead to failure of the Teradata based application. Understanding of spool space, its allocation, causes of spool space error, mitigation plan are detailed in this white paper.