The purpose of this study is to investigate the performance of a transcritical cycle for hot water heating using $CO_2$ as a working fluid. Some of the main parameters that affect the practical performance of the $CO_2$ system are discussed; the performance on the variation of refrigerant charge, changes in flow conditions of secondary fluids, and that with or without internal heat exchanger, The experimental results show that the optimum charge is approximately the same for various mass flow rates of the secondary fluid at gas cooler. The experimental results on the effect of secondary fluids are in general agreement with the experimental results of transcritical cycle in the open literature and show similar trend for conventional subcritical vapor compression cycles. The heat exchanger effectiveness increases with an increase of the heat exchange area of the internal heat exchanger regardless of the mass flow rate at the gas cooler.