Phase separation has been proven to increase performance of condensers of energy conversion systems (in vapor compression systems). Instead of conventional design, the inlet to a microchannel condenser prototype is in the middle of the height. After the first pass, in the vertical second header of the condenser, vapor phase separates from liquid phase due to gravity, and sometimes other effects. In ideal case vapor should go to the top and liquid to the bottom, resulting in increased heat transfer. Due to interaction between vapor and liquid, separation is not perfect, expressed through the separation efficiency. A mechanistic model presented in the paper is built to predict the phase separation efficiency based on force balance analysis for the liquid phase and correlations for the two-phase pressure drop. For the force balance criteria, liquid phase is divided into droplets and film and treated separately. Initial agreement with experiment is achieved to be within ±15%. For a second header at one inlet condition of the flow, the liquid separation efficiency is a function of the vapor separation efficiency. Liquid separation efficiency decreases with increasing inlet mass flux.