The quantum properties of a nondegenerate three-level cascade laser coupled to a two-mode vacuum reservoir are throughly analyzed with the use of the pertinent master equation and stochastic differential equations associated with the normal ordering. Particularly, the enhancement of squeezing and the amplification of photon entanglement of the two-mode cavity light are investigated. It is found that the two cavity modes are strongly entangled, and the degree of entanglement is directly related to the two-mode squeezing. Moreover, the squeezing and entanglement of the cavity radiation enhance with the rate of atomic injection.