This paper introduces the concept of separation of two-phase flow in condenser as a way to improve condenser efficiency. The benefits of vapor-liquid refrigerant separation and the reason why it will improve the condenser performance are explained. Numerical studies are presented on the effects of separation on performance of an R134a microchannel condenser, with the comparison to experiment data. Model predicts that at the same mass flow rate, the exit temperature is lower by 2.2 K in the separation condenser compared with that in the baseline. Up to 9% more flow rate of condensate is also predicted by the model in the separation condenser. Experiment results confirm the same trend. In addition, the reason why a certain circuiting of passes with pre-assumed separation results in the header improves the condenser is investigated by the model and results are presented.