The numerical studies of water-oil two-phase slug flow inside a two-dimensional vertical microchannel subjected to modulated wall temperature boundary conditions have been discussed in the present paper. Many researchers have contributed their efforts in exploring the characteristics of Taylor flows inside microchannel under constant wall heat flux or isothermal wall conditions. However, there is no study available in the literature which discusses the impact of modulated thermal wall boundary conditions on the heat transfer behavior of slug flows inside microchannels. Hence, to bridge this gap, an effort has been made to understand the heat transfer characteristics of the flow under sinusoidal wall temperature conditions. Initially, a single phase flow and heat transfer study was performed in microchannels, and the results of the fully developed velocity profile and heat transfer rate were validated with benchmark analytical results. Then an optimal selection of the combination of sinusoidal thermal wall boundary conditions has been made for the two-phase slug flow study. Later, the effects of amplitude (0 < epsilon < 0.03) and frequency (0 < omega < 750p rad center dot s(-1)) of the sinusoidal wall temperature profile on the heat transfer have been studied using the optimal combination of the wall boundary conditions. The results of the numerical study using modulated temperature conditions on channel walls showed a significant improvement in the heat transfer over liquid-only flow by approximately 50% as well as over two-phase flow without wall temperature modulation. The non-dimensional temperature contours obtained for different cases of temperature modulation clearly explain the root cause of such improvement in the heat transfer. Besides, the results based on the hydrodynamics of the flow have also been reported in terms of variation of droplet shapes and film thickness. The influence of Capillary number on the film thickness as well as heat transfer rates has also been discussed. In addition, the measured film thickness has also been compared with that calculated using standard empirical and analytical models available in the literature. The heat transfer rate obtained from the numerical study for the case of unmodulated wall temperature was found to be in a close match with a phenomenological model to evaluate slug flow heat transfer having a mean absolute deviation of 7.56%. (C) 2019 The Chemical Industry and Engineering Society of China, and Chemical Industry Press Co., Ltd. All rights reserved.