A low-cost and simple magnetic particle tracer method was adapted to characterize the hydrodynamic behavior of an internal- and an external-loop airlift reactor (ALR). The residence time distribution of three magnetic particles differing in diameter (5.5, 11.0 and 21.2 mm) and with a density very close to that of water was measured in individual reactor sections. The measured data were analyzed and used to determine the velocity of the liquid phase. Validation of the experimental results for liquid velocity was done by means of the data obtained by an independent reference method. Furthermore, analysis of the differences found in the settling velocity of the particle in single-liquid and gas-liquid phases was carried out, using a simplified 3D momentum transfer model. The model considering particle-bubble interaction forces resulting from changes in the liquid velocity field due to bubble motion was able to predict satisfactorily the increase in the particle settling velocity in the homogeneous bubbly regime. The effective drag coefficient in two-phase flow was found to be directly dependent on particle Reynolds number to the power of -2 but independent of gas flow-rate for all particle diameters studied. Based on the experimental and theoretical investigations, the valid exact formulation of the effective buoyancy force necessary for the calculation of the correct particle settling velocity in two-phase flow was done. In addition, recommendations concerning the use of flow-following particles in internal-loop ALRs for liquid velocity measurements are presented. (c) 2006 Society of Chemical Industry