In this paper, we present a GNU Radio implementation of a two‐way relay network testbed with physical layer network coding (PNC), namely, compute‐and‐forward. Despite the fact that the theoretical results on PNC are promising, the implementation is hindered by a number of practical problems. We first identify these problems and then propose our solutions to minimise their impact. Rather than developing complex algorithms able to cope with certain types of asynchrony, we design a synchronisation scheme for common hardware that enables implementation of general PNC algorithms with low complexity. Our experimental results show that when the signal‐to‐noise ratio (SNR) is high, PNC relaying outperforms other relaying strategies in terms of the network throughput. As such, this work experimentally verifies the benefits of PNC predicted by the theoretical analysis. Copyright © 2015 John Wiley & Sons, Ltd.