We study the thermal denaturation of double-stranded DNA, i.e., separation of its two strands upon heating. A simple homo-polymer model is used to account for the effect of base stacking on the thermal stability of DNA. We find that stacking influences the stability in a nontrivial way: It not only enhances the stability but also makes the denaturation transition sharp. While stacking between bound monomers stabilizes DNA as does base pairing, stacking in unbound parts (or loops) rather destabilizes DNA--the overall stability is, however, enhanced by stacking.