The gas and droplet mean velocities, gas turbulence modulation, droplet dispersion and heat transfer of a dilute gas-droplet two-phase flow in a vertical pipe with sudden expansion are predicted using a twofluid Eulerian model. The effect of various particle mass loadings, inlet Reynolds numbers and particle diameters on these characteristics is investigated. The turbulence of the carrier phase is modelled using second-moment closure (SMC). The results obtained using SMC are compared with those derived with the k - (epsilon) over tilde model. The presence of finely dispersed droplets in the flow attenuates gas-phase turbulence by up to 25% in the axis zone. In the wall area, the mass fraction of droplets is much lower than that in the axial region of the pipe due to droplet evaporation. Heat transfer in the gas-droplet separated flow increases (by more than twice that in single-phase air flow). Intensification of heat transfer is observed both in the recirculation zone and flow development region in the case of fine particles. (C) 2013 Elsevier Ltd. All rights reserved.