The effect of channel diameter on two-phase flow was investigated to identify the phenomena which distinguish microchannels from minichannels. Experiments were conducted with a mixture of nitrogen gas and water in circular channels of 530, 250, 100, and 50 pm diameter. The temperature, pressure and flow rates of the liquid and gas were measured and images of the flow patterns recorded. The two-phase flow was characterized by the flow regime map, void fraction, and frictional pressure drop. In the 530 and 250 pm channels, the two-phase flow characteristics were similar to those typically observed in minichannels of similar to 1 min diameter. In the 100 and 50 mum channels, the two-phase flow behaviour departed from that observed in minichannels-the occurrence of slug flow dominated, the void fraction-volumetric quality relationship departed from a linear Armand-type correlation, and mass flux no longer influenced the two-phase frictional multiplier. Clearly, the channel diameter has an effect on two-phase flow in the range of channel diameters investigated. A new slug flow model is also proposed to gain physical insight into the observed flow characteristics in microchannels. The model can predict the two-phase frictional pressure gradient for the 100 and 50 gm channels, if the actual void fraction data are used, substantiating the assumed flow mechanism. (C) 2004 Elsevier Ltd. All rights reserved.