By treating it as a contact discontinuity in the density field, a free surface between two immiscible fluids can be automatically ‘captured’ by the enforcement of conservation laws. A surface‐capturing method of this kind requires no special tracking or fitting treatment for the free surface, thereby offering the advantage of algorithm simplicity over the surface‐tracking or the surface‐fitting method. A surface‐capturing method based on a new multi‐fluid incompressible Navier–Stokes formulation is developed. It is applied to a variety of free‐surface flows, including the Rayleigh–Taylor instability problem, the ship waves around a Wigley hull and a model bubble‐rising problem to demonstrate the validity and versatility of the present method. Copyright © 2000 John Wiley & Sons, Ltd.