In this paper, cycle performance analysis of $CO_2-C_3H_8$ (R744-R290) cascade refrigeration system with internal heat exchanger is presented to offer the basic design data for the operating parameters of the system. The operating parameters considered in this study include subcooling and superheating degree and gas cooling pressure and evaporating temperature in the propane (R290) low temperature cycle and the carbon dioxide (R744) high temperature cycle. The main results were summarized as follows : The COP of cascade refrigeration system of $CO_2-C_3H_8$ (R744-R290) increases with the increasing subcooling degree, but decreases with the increasing superheating degree. The COP of cascade refrigeration system increases with the increasing evaporating temperature, but decreases with the increasing gas cooling pressure. Therefore, superheating and subcooling degree, compressor efficiency, evaporating temperature and gas cooling pressure of $CO_2-C_3H_8$ (R744-R290) cascade refrigeration system have an effect on the COP of this system.