Unloading gas wells with nitrogen (N2) is one of the most common applications of coiled tubing (CT). The unique feature of CT unloading, as compared to conventional gas lift, is that the gas injection depth can be changed continuously. Despite the large number of CT unloading jobs performed annually, the fundamental and frequently-asked questions such as optimum N2 rate and optimum gas injection depth as well as CT run into hole (RIH) speed remain. There are no simple and efficient methods that can be used to calculate these design parameters.Unloading a water-loaded gas well with N2 and CT is a dynamic and transient hydraulic process. Before a gas well is significantly unloaded and the bottomhole pressure (BHP) is reduced significantly below the reservoir pressure, the effect of the reservoir on the unloading process can be neglected. As far as the simulation of multiphase annulus flow is concerned, the liquid phase comes solely from the original liquid that loads the well. This paper presents a simulation study focused on the main factors that affect the hydraulic behavior of the CT unloading process. The optimum N2 pump rate is determined based on the criterion of minimum BHP. Simulation results indicate that as N2 rate increases, the hydrostatic pressure in the annulus and BHP decrease significantly. However, further increase of the N2 rate beyond a certain threshold value would increase the friction pressure loss in the annulus and consequently increase the BHP, especially for gas wells where the CT/tubing or CT/casing clearance is small. It is found that as gas injection depth increases, the minimum achievable bottomhole pressure is decreased. Simulation results also indicate that for smaller wellbores where annular friction loss is a limiting factor, a smaller diameter coiled tubing string may be preferred. The challenges associated with liquid unloading in large and deviated wellbores are also discussed.