Due to the harmful effects of synthetic refrigerants, such as chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs)n the environment, natural refrigerants like carbon dioxide (CO₂) have been attracting great interest. The higher inter-stage superheating of CO₂ makes it difficult to predict the effects of the intercooling on heating performance of a two-stage transcritical CO₂ cycle. In addition, very little is known about the potential of inter-stage heat rejection recovery in the heating performance enhancement of this cycle. In order to explore the effects of intercooling and inter-stage heat rejection recovery potential, three “sub-cycles”—(1) a sub-cycle with heat recovery, (2) a sub-cycle without heat recovery, and (3) a sub-cycle without intercooling—were modeled in Engineering Equation Solver (EES) software for three commonly-used two-stage transcritical cycles: (1) an intercooler cycle, (2) a flash cycle, and (3) a split cycle. Then, the discharge pressure and intermediate pressure were simultaneously optimized. Based on the optimization results, the heating performance of the sub-cycles for each cycle were compared. The results demonstrate that the incorporation of intercooling without heat recovery was detrimental to the heating performance in comparison to the absence of intercooling. It is also clear that there is a great potential for heating performance improvement through inter-stage heat recovery.