In an earlier paper it was shown that the basic one-dimensional transient two-fluid model is capable of capturing horizontal and near-horizontal slug flow automatically. However, that work did not account for the effect of gas entrainment into the liquid slug body which is deemed to be an important phenomenon. In this paper, a mathematical model to account for the entrainment of gas bubbles into liquid slugs is proposed, implemented and validated. The model is cast in the framework of the existing two-fluid model and is incorporated in a computational procedure, which is applied to the prediction of slug flow in horizontal and slightly inclined pipes. The model entails the introduction of a scalar equation for the transport of the dispersed gas bubbles within the liquid. The rate of entrainment of gas at the slug front is supplied as a closure relation, the expression for which is obtained from existing correlations. The model is validated against experimental data and the comparison shows satisfactory agreement. However, the inclusion of the aeration model appears to yield marginal differences when compared to predictions which ignore entrainment in the horizontal pipe flow cases studied. More significant differences are obtained in the case of the flow in a V-section pipeline. (C) 2003 Elsevier Ltd. All rights reserved.