This paper describes the design of an in-vacuum, water-cooled beam stop (X-ray shutter) for the materials science (X-ray diffraction) beamline proposed to be built on the wavelength shifter in the Indus-2 (2.5 GeV) synchrotron radiation source. The radiation source impinges ∼ 1 kW power on the beam stop and the heat transfer capabilities of the beam stop have been evaluated. Temperature distribution in the beam stop has been obtained under various cooling conditions using the finite element analysis calculations with ANSYS software. Design parameters of the beam stop have been optimised. It is also shown that radiation cooling alone is not sufficient for taking away the heat load. Water-cooling of the beam stop is essential.