The design, in which the capsules are packed in the bed at different sections based on the Phase Change Material (PCM) melting temperature, is an effective method to improve the heat-storage performance of the latent heat energy storage system. A latent heat storage system was established in the present study in order to optimize the arrangement of cascaded PCM capsules. Four kinds of paraffin with different melting temperatures were selected as the PCM for the experiment. The effects of stage number, cascade ratio and melting temperature on the heat-storage performance of the latent heat storage system were investigated during the charging and discharging operations. The complete time of charge and discharge, heat storage-release capacity, energy efficiency, exergy efficiency and entransy dissipation (based on a new entransy theory) were computed for different arrangement cases, in order to analyze and evaluate the heat-storage performance of the system under different stage numbers and cascade ratios of PCMs. The results revealed that the arrangement of cascaded PCM capsules has an obvious effect on the heat-storage performance of the system. When more high melting PCMs are adopted, the heat storage-release capacity, energy efficiency and exergy efficiency increases, while the entransy dissipation decreases. However, the temperature increase becomes slow, and the charging or discharging process becomes long.