A multi-type heat pump controls the mass flow rate of the working fluid to cope with variable heat loads when it is under dynamic load condition. This paper describes the exergy analysis associated with the dynamic response of heat pump. First, a basic heat pump cycle is examined at steady state to show the general trends of exergy changes in each process of the cycle. Entropy generation issue in the exchangers is discussed to optimize the heat pump cycle. Second, the performance of the inverter-driven heat pump is compared to that of the conventional one when the heat load is variable. Third, the exergy destruction rate associated with the ON/OFF operations of the heat pump is calculated by simulating the thermodynamic states of the condenser and the evaporator. The inefficiency of the ON/OFF operation during the transient period is quantitatively revealed by the exergy analysis.