A circular loop reactor was built for application to a heterogeneous liquid-liquid reaction. In order to investigate the dispersion behaviour of droplets in the reactor, basic experiments were performed using a number of liquid-liquid dispersions. Droplets discharged form the impeller region were found to grow due to coalescence in the circulation region. Mean droplet diameter decreased exponentially with elapsing time. An expression correlating the steady-state mean droplet diameter with the operating conditions was derived. Moreover, the transition time required for the droplet diameter to reach the equilibrium value was determined and correlated with the operating conditions.