A refrigeration system adapted particularly for a vehicle air conditioning system and including a capacity modulation mechanism. A portion of the liquid refrigerant at the outlet of the condenser (18) is fed back to the suction chamber (106) of the compressor through the orifice (130) of a bypass valve (30). The valve is mounted on the compressor and is responsive to suction chamber pressure. As the evaporator temperature decreases, suction chamber pressure also decreases thereby opening the valve to meter a small amount of bypassed liquid refrigerant into the suction chamber of the compressor. A portion of the hot discharge gas may also be bypassed back into the suction chamber through the same valve (30) that meters the bypassed liquid refrigerant.