We present a comprehensive theoretical and experimental study on a new passive mode-locking technique, called cascaded second-order nonlinearity mode locking (CSM), which exploits cascaded second-order nonlinearities to obtain large third-order susceptibilities from an intracavity second harmonic crystal. The nonlinear phase shift that originates in the nonlinear crystal is converted into a nonlinear amplitude modulation by a suitable intracavity aperture. A numerical model, based on a perturbative approach, allows the nonlinear loss modulation of resonators used for CSM to be calculated as a function of the resonator parameters and of the phase mismatch. The predictions of the model are confirmed by experiments performed on a CW Nd:YAG laser. The effects of group velocity mismatch and the limitations which it poses on the minimum achievable pulsewidth are analyzed both experimentally and theoretically.