A system and method for optimization of a continuous digester operation of a continuous digester are presented. The system includes a tracking module for tracking of process variables in the continuous digester operation and developing non-linear empirical model for one or more quality variables. A soft sensor module is used for deploying a soft sensor based on the non-linear empirical model and for generating soft measurements corresponding to the quality variables at different locations. A constraint management module is used for generating dynamically a set of constraints that are used by a model predictive controller for computing set points for optimization of continuous digester operation.