The experimental system for the transcritical CO2 residential air-conditioning with an internal heat exchanger was built. The effects of working conditions on system performance were experimentally studied. Based on the experimental dada, the second law analysis on the transcritical CO2 system was performed. The effects of working conditions on the total exergetic efficiency of the system were investigated. The results show that in the studied parameter ranges, the exergetic efficiency of the system increases with the increases of gas cooler side air inlet temperature, gas cooler side air inlet velocity and evaporating temperature. And it will decrease with the increases of evaporator side air inlet temperature and velocity. Then, a complete exergetic analysis was performed for the entire CO2 transcritical cycle including compressor, gas cooler, expansion valve, evaporator and internal heat exchanger under different working conditions. The average exergy loss in gas cooler is the highest one under all working conditions which is about 30.7% of the total exergy loss in the system. The second is the average exergy loss in expansion valve which is about 24.9% of the total exergy loss, followed by the exergy losses in evaporator and compressor, which account for 21.9% and 19.5%, respectively. The exergy loss in internal heat exchanger is the lowest one which is only about 3.0%. So in the optimization design of the transcritical CO2 residential air-conditioning system more attentions should be paid to the gas cooler and expansion valve. (C) 2010 Elsevier Ltd. All rights reserved.