A numerical study of an oil-water Taylor flow is presented in this paper to explore its flow and heat transfer characteristics. Due to the large surface area to volume ratio in narrow channels, using slug flows, high heat and mass transfer rates could be achieved. Sound knowledge of the underlying physics of slug flow is required for the practical design of microfluidic devices. In this study, hydrodynamics and heat transfer characteristics of dispersed oil droplets flowing inside a vertically upward circular microchannel (D = 0.1 mm) with water being the carrier phase have been explored numerically. ANSYS Fluent was employed to capture the liquid-liquid interface using volume of fluid method. Two different boundary conditions were considered in the present study. First, an isothermal wall of 373 K and later a constant wall heat flux (420 kW/m 2 ) were, respectively, prescribed over the wall of the microchannel.The numerical code was validated against the results available in the literature, and the significant results in the form Nomenclature: Ca, capillary number (dimensionless); D, diameter (m); F, body force vector (kg m −2 s −2 ); h, convection heat transfer coefficient (W m −2 K −1 ); k, thermal conductivity (W m −1 K −1 ); L, length (m); Nu, Nusselt number (dimensionless); P, pressure (Pa); Pe, Peclet number (dimensionless); q, heat flux (W m −2 ); R, microhannel radius (m); Re, Reynolds number (dimensionless); S , mass source term (kg/m 3 s); t, time (s); T, temperature (K); U TP , mixture velocity (m/s); u cell , unit cell velocity (m/s); V, velocity vector (m/s)