The hydrophobic microporous layer (MPL) in PEM fuel cell improves water management but reduces oxygen transport. We investigate these conflict impacts using nano-tomography and pore-scale modelling. The binary image of a MPL is acquired using FIB/SEM tomography. The water produced at the cathode is assumed to condense in the catalyst layer (CL), and then builds up a pressure before moving into the MPL. Water distribution in the MPL is calculated from its pore geometry, and oxygen transport through it is simulated using pore-scale models considering both bulk and Knudsen diffusions. The simulated oxygen concentration and flux at all voxels are volumetrically averaged to calculate the effective diffusion coefficients. For water flow, we found that when the MPL is too hydrophobic, water is unable to move through it and must find alternative exits. For oxygen diffusion, we found that the interaction of the bulk and Knudsen diffusions at pore scale creates an extra resistance after the volumetric average, and that the conventional dusty model substantially overestimates the effective diffusion coefficient. Copyright (c) 2014, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.