In accordance with the present invention, a pallet return pallet racking system is
provided utilizing a two-level rail system, wheeled carts in rolling relation to each of the rail systems, a transfer assembly and a release mechanism. The rail system includes at least one pair of spaced, parallel feed rails and at least one pair of spaced, parallel return rails. The feed rails and return rails each have an unloading (front) end, a loading (rear) end as well as a rolling surface. At least one cart having wheels is provided which is capable of rolling engagement with the feed rails and which is capable of being automatically transferred to rolling engagement with the return rails which are positioned and operable below the feed rails.