Multitasking, such as the concurrent use of a mobile phone and operating a motor vehicle, is a significant distraction that impairs driving performance and is becoming a leading cause of motor vehicle crashes. This study investigates the impact of mobile phone conversations on car-following behaviour. The CARRS-Q Advanced Driving Simulator was used to test a group of young Australian drivers aged 18-26 years on a car-following task in three randomised phone conditions: baseline (no phone conversation), hands-free and handheld. Repeated measure ANOVA was applied to examine the effect of mobile phone distraction on selected car-following variables such as driving speed, spacing, and time headway. Overall, drivers tended to select slower driving speeds, larger vehicle spacings, and longer time headways when they were engaged in either hands-free or handheld phone conversations, suggesting possible risk compensatory behaviour. In addition, phone conversations while driving influenced car-following behaviour such that variability was increased in driving speeds, vehicle spacings, and acceleration and decelerations. To further investigate car-following behaviour of distracted drivers, driver time headways were modelled using Generalized Estimation Equation (GEE). After controlling for various exogenous factors, the model predicts an increase of 0.33s in time headway when a driver is engaged in hands-free phone conversation and a 0.75s increase for handheld phone conversation. The findings will improve the collective understanding of distraction on driving performance, in particular car following behaviour which is most critical in the determination of rear-end crashes.