An experimental investigation on the heat pump performance improvement equipped with the two-phase ejector called “an ejector-expansion heat pump (EEHP)” is proposed. The system performance of the EEHP is compared with a vapour-compression heat pump (VCHP). The improvement potential is determined and discussed. The heat pump test system is constructed which is based on a water-to-water heat pump. It can be experimented with both EEHP and VCHP. The two-phase ejector with the cooling load up to 2500 W is installed for experiment. The results show that the EEHP always produces a higher heating rate and COP than the VCHP throughout the specified working conditions. The heating COP is increased by 5.7-12.2% depending on the working conditions. It is also that under the same heat sink and heat source temperature, the EEHP can produce lower compressor discharge temperature and lower compressor pressure ratio than the VCHP. This is evidence that the two-phase ejector can provide better compressor working characteristics which yields a longer compressor lifetime. It is demonstrated that a key to the performance of the EEHP is the expansion pressure ratio. A larger expansion pressure ratio yields a higher improvement potential when compared with the VCHP.