Lubricant in compressor usually flows out with refrigerant. Thus, it is evitable for lubricant to be present in the heat exchanger, which significantly affects the heat exchanger performance. This paper is to investigate the effects of PAG oil on R134a distribution in the microchannel heat exchanger (MCHX) with vertical headers and to provide a tool to model R134a (with oil) distribution and its effects on MCHX capacity. The flow configuration in MCHX under the heat pump mode of the reversible system is mimicked in the experimental facility: refrigerant-oil mixture is fed into the test header from the bottom pass and exits through the top pass. It is found that a small amount of oil (OCR=0.5%) worsen the distribution. But further increasing OCR to 2.5% and 4.7%, the distribution becomes better. However, in a multi-pass microchannel heat exchanger model (considering oil effects), though the distribution is better and the capacity is closer to the uniform distribution case, the MCHX capacity decreases with respect to OCR because oil affects the heat transfer and pressure drop in the microchannel heat exchanger.