The performance of the transcritical CO 2 refrigeration system requires further improvement in order to save energy. In this paper, the effect of the internal heat exchanger (IHE) on the performance of the ejector expansion transcritical CO 2 refrigeration system is analyzed theoretically based on the first law of thermodynamics. The possible parameters affecting system efficiency are investigated. The variation of ejector entrainment ratio, pressure recovery, ejector efficiency and the coefficient of performance (COP) is obtained for the ejector expansion transcritical CO 2 refrigeration cycles with and without IHE. It is found that the addition of IHE in the CO 2 ejector refrigeration cycle increases the ejector entrainment ratio and the ejector efficiency, and decreases pressure recovery under the same gas cooler pressures. Unlike in a conventional throttle valve cycle, an IHE addition does not always improve the system performance in the ejector expansion cycle. Whether the energy efficiency of the ejector cycle by IHE can be improved depends on the isentropic efficiency level of the ejector. The utilization of IHE is only applicable in the cases of lower ejector isentropic efficiencies or higher gas cooler exit/evaporator temperatures for the ejector expansion system from the view of energy efficiency.