In regions with sub-freezing winter temperatures, the performance of conventional air-source vapor compression heat pumps drop drastically during extended periods of low outdoor ambient temperatures. Modifying the basic cycle configuration with liquid flooded compression and regeneration reduces the thermodynamic inefficiencies associated with the heat pump equipment and increases energy efficiency with less degradation in heating capacity especially at low ambient temperatures. Flooding non-volatile liquid along with refrigerant vapor stream into the compressor leads to a near isothermal compression process and thereby reduces desuperheating losses in the condenser. Regeneration improves the system performance by reducing throttling losses in the expansion device. The performance of a heat pump operating with flooded compression and regeneration has been analyzed for three sub-freezing outdoor ambient climatic regions: Boston, Indianapolis and Minneapolis. The results indicate that at −10 °C ambient temperature, COP (heating) of the flooded compression with regeneration cycle was approximately 13% higher than the standard vapor compression cycle. The Heating Seasonal Performance Factor (HSPF) of a flooded compression with regeneration cycle for Boston, Indianapolis and Minneapolis was approximately estimated to be 9%, 10% and 13% higher than the standard vapor compression cycle respectively.