Liquid-liquid slug flow inside a circular microchannel was studied experimentally to examine the influence of the presence of sodium dodecyl sulfate (SDS) on hydrodynamics and mass transfer. The microchannel was made of polytetrafluoroethylene (PTFE), with the internal diameter of 0.6 mm. The applied method for estimating mass transfer coefficients considerably increased the accuracy of the results. The findings revealed that the presence of SDS in the aqueous phase decreased the slug length of both phases due to the decrement of the interfacial tension, leading to the enhancement of the specific interfacial area. However, improved recirculations inside the slugs were mainly responsible for the enhanced mass transfer. The influence of SDS on internal circulations was remarkably greater than that on the interfacial area. Although the mass transfer coefficients were augmented with the SDS concentration, the increasing effect was levelled off at higher concentrations. Accordingly, a new correlation relating the overall volumetric mass transfer coefficient to Capillary number, Reynolds number and SDS concentration was proposed.