A three-dimensional study of suspension of drops in simple shear flow has been performed at finite Reynolds numbers. Results are obtained using a finite difference/front tracking method in a periodic domain. The effects of the Reynolds number and the Capillary number are addressed at two volume fractions: 0.195 and 0.34. It is observed that suspensions of deformable drops exhibit a shear-thinning behavior. Similar to the motion of a single drop, drops migrate away from the walls. The effective viscosity, the first and the second normal stress differences oscillate around a mean value in all cases. The first normal stress difference increases with the Capillary number, the Reynolds number and the volume fraction. Results show that drops deform more and orient more in the flow direction as the Capillary number or the volume fraction is increased. Also, the average size of clusters is smaller than for suspension of rigid particles. The radial dependence of the pair distribution function across the channel has been studied. This dependency shows that the tendency to form clusters is reduced as the Capillary number increases or the volume fraction decreases. (C) 2011 Elsevier Ltd. All rights reserved.