An experimental study of three‐phase dispersed flow in a horizontal pipe has been carried out. The pressure drop over the pipe strongly increases with increasing bubble and drop volume fraction. Because of the presence of drops the transition from dispersed bubble flow to elongated bubble flow occurs at a lower gas volume fraction. The gas bubbles have no significant influence on the phase inversion process. However, phase inversion has a strong effect on the gas bubbles. Just before inversion large bubbles are present and the flow pattern is elongated bubble flow. During the inversion process the bubbles break‐up quickly and as the dispersed drop volume fraction after inversion is much lower than before inversion, a dispersed bubble flow is present after inversion. (When inversion is postponed to high dispersed phase fractions, the volume fraction of the dispersed phase can be as high as 0.9 before inversion and as low as 0.1 after inversion.) © 2009 American Institute of Chemical Engineers AIChE J, 2009