Due to the low coefficient of the performance compared with conventional refrigerant systems, new technology, such as the thermal expander, was suggested to be employed to improve the performance of CO2 system, which has been one of the most promising technologies in replace of the working fluids. Experiments were carried out on the CO2 transcritical cycle with a designed novel expander at the condition of water source heat pump in order to study the performance characteristics of CO2 expander, its influences on the entire system, and the performance characteristics of the system at the variable environmental conditions. The results show that the suggested CO2 expander has the attractive potential to improve the performance of the CO2 transcritical cycle, the efficiency of expander is mainly dependant on the rotational speed, and the maximum efficiency of the expander can be reached by the optimization of the operational condition. Furthermore the expander has an important impact on the implementation of the entire system. Based on the obtained results, it was implied that the performance of the system is the total integrated effect of all factors, and the optimization of operational parameters is in further investigation.