Although flow of two-phase fluids is studied in detailed for pipes, there exists a lack of information about aerated fluid flow behavior inside a wellbore. This study aims to simulate gasliquid flow inside horizontal eccentric annulus using an Eulerian-Eulerian computational fluid dynamics (CFD) model for two-phase flow patterns i.e., dispersed bubble, dispersed annular, plug, slug, churn, wavy annular. To perform experiments using air-water mixtures for various in-situ air and water flow rates, a flow loop was constructed. A digital high speed camera is used for recording each test dynamically for identification of the liquid holdup and flow patterns. Results showed that CFD model predicts frictional pressure losses with an error less than 20 for all two-phase flow patterns when compared with experimental data. Copyright © 2011 by ASME.