Tilting the blade sections to the flow direction (blade sweep) would increase the operating range of an axial compressor due to modifications in the pressure and velocity fields on the suction surface. On the other hand, blade tip gap, though finite, has great influence on the performance of a turbomachine. The present paper investigates the combined effect of these two factors on various flow characteristics in a low speed axial flow compressor. For this present study, nine computational domains were modeled; three rotor sweep configurations (0°, 20° and 30°) and for three different clearance levels for each rotor. Commercial CFD solver ANSYS CFX 11.0 is used for the simulations. Results indicated that tip chordline sweep is found to improve the stall margin of the compressor by modifying the suction surface boundary layer migration phenomenon. Diffusion Factor (DF) contours showed the severity of stalling with unswept rotor. For the swept rotors, the zones of high probable stall are less severe and they become less in size with increasing sweep. Increment in the tip gap is found to gradually affect the performance of unswept rotor, while the effect is very high for the two swept rotors for the earlier increments. As a minimum clearance is unavoidable, swept rotors suffer relatively higher deviation from the idealistic behavior than the unswept rotor due to tip clearance.