A two-phase ejector is often used to improve the performance of a CO2 transcritical refrigeration system, such systems are also, mostly equipped with an internal heat exchanger. Any effect on performance due to suction nozzle pressure drop (SNPD) is generally neglected for theoretical studies using constant pressure mixing model. A few authors, in the recent past, have highlighted the effect of SNPD. A detailed investigation of effect of SNPD as well as sub-cooling on the performance parameters like pressure recovery, ejector efficiency, entrainment ratio and overall COP of the system are presented here. Optimized ejector SNPD values are determined for maximizing COP across a wide range of operating conditions. COP increment upto 4.95% is observed at optimized SNPD condition. Further, the effect of degree of sub-cooling on cycle parameters is studied and optimum degree of sub-cooling for COP improvement for a range of operating conditions is also determined.