A variable capacity direct expansion solar-assisted heat pump system is developed and operated for domestic hot water application. The proposed system employs a bare solar collector which also acts as the system evaporator. A variable frequency drive modulates the compressor speed to maintain a proper matching between the heat pumping capacity of the compressor and the evaporative capacity of the collector under widely varying ambient conditions. Experimental results indicate that the coefficient of performance of the system can be improved significantly by lowering the compressor speed as ambient temperature rises from winter to summer months. Experimentally measured system COPH and water side heat capacity rate are also in good agreement with theoretical predictions.