In this paper, thermoeconomic optimization and exergy analysis are applied to a CO2/NH3 cascade refrigeration cycle. Cooling capacity, ambient temperature and cold space temperature are constraints of the optimization procedure. Four parameters including condensing temperature of ammonia, evaporating temperature of carbon dioxide, condensing temperature of carbon dioxide and temperature difference in the cascade condenser are chosen as decision variables. The objective function is the total annual cost of the system which includes costs of input exergy to the system and annualized capital cost of the system. Input exergy to the system is the electricity consumption of compressors and fans, and the capital cost includes purchase costs of components. Results show that, optimum values of decision variables may be found by trade-off between the input exergy cost and capital cost. Results of the exergy analysis for each of the system components in the optimum state are also given. (C) 2010 Elsevier Ltd. All rights reserved.