This paper provides an exergy analysis of the multistage cascade refrigeration cycle used for natural gas liquefaction. The equations of exergy destruction and exergetic efficiency for the main cycle components such as evaporators, condensers, compressors, and expansion valves are developed. The relations for the total exergy destruction in the cycle and the cycle exergetic efficiency are obtained. Also, an expression for the minimum work requirement for the liquefaction of natural gas is developed. It is shown that the minimum work depends only on the properties of the incoming and outgoing natural gas, and it increases with decreasing liquefaction temperature. The minimum work for a typical natural gas inlet and exit state is determined to be 456.8 kJ kg(-1) of liquefied natural gas (LNG), which corresponds to a coefficient of performance (COP) of 1.8. Using a typical actual work input value; the exergetic efficiency of the multistage cascade refrigeration cycle is determined to be 38.5% indicating a great potential for improvements. Copyright (C) 2002 John Wiley Sons, Ltd.