In the present work, the transition from stratified flow to slug flow regime for airwater and air-oil two-phase flow was simulated and analysed numerically. The simulation was carried out by numerically solving a three dimensional (3D) implicit unsteady volume of fluid (VOF) model. Typical slug characteristics, such as slug length, slug translational velocity, and slug frequency were determined. The numerical results were validated by comparison with experimental results and a reasonable agreement with an error less than 8.7 was achieved. Moreover, the results from the proposed model were compared to the results obtained from three empirical correlations for the two-phase slug flow and it demonstrated a good agreement. The simulation results demonstrated that for the same boundary conditions, the characteristics in terms of slug initiation and slug growth were strongly affected by the fluid properties. The simulation results also show that for air-oil flow, the pressure drop, slug translational velocity, and slug frequency values were less than in air-water flow by 2.9, 14.3, and 7.9, respectively. © Copyright 2018 Inderscience Enterprises Ltd.