A mathematical model is developed to simulate the performance of an R-744 (CO2) based air conditioning system operating under transcritical conditions, but near the critical point. The system is designed for summer, and operates in a transcritical mode under the designed summer conditions. However, as the ambient conditions change from summer to winter, the system can undergo a transition from transcritical to near critical and finally subcritical mode. The mathematical model is developed to analyze the effects of gas cooler air flow rate and refrigerant charge on the transition of cycle. The model is validated with experimental results. Further, the influence of refrigerant charge, gas cooler air flow rate on transition of the cycle from transcritical to subcritical mode is analyzed under different ambient conditions. Results show that decrease in total charge, ambient temperature or increase in gas cooler air flow rate, independently or in combination, can lead to a transition from transcritical to subcritical mode. Further, by increasing the refrigerant charge beyond 1100 gm, the system can be made to operate in transcritical mode when the ambient temperature is below 17 & DEG;C. It is expected that the study is useful in the design of suitable control systems for optimal operation of the system subjected to widely varying ambient conditions.