A steady-state model of the flow structure and mixing processes in the upper dilute zone of a circulating fluidized bed (CFB), where variations in flow parameters with height are neglected, is presented. The model is based on a two-phase structure, consisting of dense particle clusters or strands and a lean gas-particle suspension as observed in several investigations. It accounts for vertical flow of gas and particles in both phases, as well as for gas and particle dispersion in the lean phase and interphase mass transfer. With the aid of fibre optical measurements of local solids volume concentration, a set of equations is developed that allows calculation of gas and particle velocities and local volume fractions of the phases for given operating conditions of the CFB. Dispersion and interphase transfer coefficients are determined by fitting measured and calculated temperature profiles that were generated by local electrical heating. The results indicate that particle dispersion is significantly influenced by particle-particle collisions and that an intensively coupled heat and mass transfer between the dense clusters and the lean phases exists. The complete model, with all parameter values identified, is applied to two experiments in which heat transport in the upper dilute zone of the bed is investigated under electrical and radiant heating, respectively.