A unique air dryer for use in an air compressor system which includes an air governor, an air compressor and a storage tank is disclosed. The air dryer incorporates therein an isolation valve adjacent the inlet from the compressor which serves to isolate the compressor during the unloading cycle. Also incorporated into the housing of the air dryer is a purge valve which is simultenously opened when the isolation valve is closed, and vice versa. A check valve is also incorporated into the air dryer housing adjacent the outlet to the storage tank. Finally, a small conduit connecting the inlet port from the compressor to the outlet of the air dryer is included. A small check valve is disposed within the conduit so that air flow is only permitted to flow from the outlet to the inlet when the system is in its unloaded mode in order to maintain pressure in the pipe which connects the compressor to the air dryer.