The closure method developed in earlier papers [J. Qian, Phys. Fluids26, 2098 (1983);27, 2412 (1984)] is applied to the study of the inverse energy cascade in two‐dimensional turbulence. The resultant inertial‐range energy spectrum isE(k)=2.58g0.244&egr;2/3k−5/3. Heregis a localization factor and &egr; is the rate of energy cascade. This result is compatible with the numerical experiments by Lilly [D. K. Lilly, Phys. Fluids Suppl. II12, 24 (1969)], Siggia and Aref [E. D. Siggia and H. Aref, Phys. Fluids24, 171 (1981)], and Frisch and Sulem [U. Frisch and P. L. Sulem, Phys. Fluids27, 1921 (1984)].