In this study, the thermodynamic analysis of a two–stage transcritical CO2 cycle using flash gas by–pass is presented. The gas cooler pressure, the inter–stage pressure and the evaporation temperature of CO2 are selected as variable parameters. The cooling performance and exergetic efficiency variations of the cycle are graphically presented with these parameters. A comparison is presented between the flash gas by–pass two–stage transcritical cycle and the conventional two–stage transcritical cycle and the optimum operating parameters of the cycles are discussed. The importance of flash gas by–pass application is presented for energy and exergy efficiency improvement of two–stage transcritical CO2 cycles.