Gasified (aerated) fluids, having two-phases, are commonly used in drilling operations, especially for achieving underbalanced conditions. While adjusting the flow rates for each phase, common application is to adjust liquid phase for proper cuttings transport, and to adjust gas phase for controlling bottomhole pressure. Unfortunately, each of these phases flow with relatively different local velocities, causing various flow patterns to occur, which leads to fluctuations in hole cleaning performance as well as frictional pressure losses. These flow patterns are influenced by hole inclination, geometry, and presence of cuttings.This study addresses the hydrodynamic behavior of two-phase drilling fluids in inclined section of wellbores with the presence of cuttings as a third phase with inner pipe rotation, considering eccentricity. Extensive experiments were conducted at a cuttings transport flow loop using air-water mixtures under a wide range of flow rates, rate of penetrations (ROPs), pipe rotations and hole inclinations. During the experiments, frictional pressure losses, in-situ flow rates for each phase, ROP, inclination and pipe rotation speed were recorded. The experimental data was also used to investigate the cuttings transport mechanisms. A comprehensive mechanistic model was developed for determining the frictional pressure losses and hole cleaning performance of two-phase drilling fluids based on the experimental observations. It has been concluded that the proposed model is estimating the frictional pressure losses reasonably accurate when compared with the measured values.