This paper describes an analysis on performance and exergy of R744-R404A cascade refrigeration system with internal heat exchanger to optimize the design for the operating parameters of this system. The operating parameters considered in this study include subcooling and superheating degree, internal heat exchanger and compression efficiency, evaporation and condensation temperature in the R744 low- and R404A high- temperature cycle, respectively. The main results are summarized as follows : As the evaporation temperature of cascade heat exchanger increases, the COP of R404A high-temperature cycle increases. But the COP of R744 low-temperature cycle decreases, and the COP of total cascade cycle is almost constant. As cascade evaporation temperature increase, the exergy loss in the R404A condenser and the R744 internal heat exchanger is the largest and the lowest among all components, respectively. Therefore, the exergy loss in the condenser and compressor of R404A must be decreased to enhance the COP of R744-R404A cascade refrigeration system.