Domestic hot water production and space heating make up a considerable portion of the energy used in the domestic sector particularly in regions with extremely cold climatic conditions. Due to the heavy dependence on fossil fuels, the thermal energy consumption for space heating and hot water production results in substantial CO2 emissions. As the urgency to decarbonize these processes grows, the importance of clean and renewable energy systems is becoming increasingly recognized. Direct-expansion solar-assisted heat pump (DX-SAHP) water heaters are considered environmentally friendly and efficient systems that utilize both solar incident irradiation and ambient energy as heat sources, unlike air source heat pumps that rely solely on energy from ambient air. In this research, the impact of ambient conditions and DX-SAHP design parameters including collector area, compressor rotational speed and water tank volume on the second law performance of a DX-SAHP is investigated. A mathematical model is developed using a control volume analysis of each component and implemented in MATLAB®. CoolProp database is coupled with MATLAB® to determine the working fluid thermal physical properties. The results show that around 90% of exergy loss occurs in the collector, followed by compressor and condenser, respectively. Besides, as either ambient temperature or solar radiation level increases the second-law efficiency decreases. Moreover, the second-law efficiency increases from 10% to 15% with the increase of compressor speed from 1500 to 3500 rpm, whereas it diminishes as the collector area increases. The water tank volume has a minor influence on the system's exergy efficiency.