Annular flow is a based flow pattern of two-phase in the pipe, and oil air flow in delivery pipe of Oil-Air lubrication (OAL) system is one of them. In order to learn the entrainment mechanism of annular flow in OAL pipe, both experiment adopted observational method and numerical simulation used Computational Fluid Dynamic (CFD) were carried out. The pipe diameter is 4mm and Volume of Fluid (VOF) model was used for two phase flow in simulation. The results shows that: it is a wave-annular flow in OAL pipe, and the oil wave in pipe is affected by air, when air velocity is low, the wave is clearly and regularly, but when air velocity increases, the wave become turbulent. When oil or air flow rate increases, the shear stress of pipe wall will be increased, the wave height will be increased as air velocity increases.