The conditions and mechanism of drop formation at the interface of oil-water wavy stratified flows that lead to the onset of drop entrainment and the transition to dual continuous flow pattern were investigated both experimentally and theoretically. Experimentally, high-speed video imaging was used to capture the mechanism of drop detachment from waves during oil (5.5 mPa s, 828 kg/m(3)) and water stratified flow in a 0.014 m diameter horizontal acrylic pipe. The visual observations revealed that the faster phase undercuts the other one while the waves present in both phases deform until drops are detached. The wave deformation was attributed to the drag force, that originates from the relative movement between the two phases, exceeding the stabilising surface tension force. Based on this force balance an equation was developed that related the wavelength to the amplitude that can lead to drop detachment. This drop entrainment equation and the wave stability equation suggested in part I of the paper [A1-Wahaibi, T., Angeli, P., 2007. Transition between stratified and non-stratified horizontal oil-water flows. Part 1: Stability analysis. Chemical Engineering Science, in press, doi:10.1016/j.ces.2007.01.024], defined three regions in a wave amplitude versus length graph, namely the stable waves, the unstable waves and the drop entrainment region. The intersection of the lines produced by these two equations gives the critical minimum wave characteristics for drop formation. These agreed well with experimental data when a new correlation for the drag coefficient on the waves was used, suitable for liquid-liquid flows. Also the characteristics of waves that were experimentally found to form drops fell within the predicted entrainment region. (C) 2007 Elsevier Ltd. All rights reserved.