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Optical losses of dissimilar fiber fusion splices are modeled using a combination of diffusion simulation and beam propagation method; open-source codes are provided. It is demonstrated that an optimal amount of diffusion is required to achieve the minimum splice loss. Additional annealing beyond the optimal level is detrimental. Furthermore, oscillation of splice loss with the geometrical parameters of the heat zone due to an optical interference effect is revealed, which can be intentionally utilized to reduce dissimilar fiber splice losses. Understanding these diffusion-related splice loss mechanisms is important for splicing process optimization, as well as design of fusion splicers and novel postsplicing heat treatment devices.