Two-phase flow through fractured media is important in geothermal, nuclear, and petroleum applications. In this research an experimental apparatus was built to capture the unstable nature of the two-phase flow in a smooth-walled fracture and display the flow structures under different flow configurations in real time. The air-water relative permeability was obtained from experiment and showed deviation from the X curve behavior suggested by earlier studies. Through this work the relationship between the phase channel morphology and relative permeability in fractures was determined. A physical tortuous channel approach was proposed to quantify the effects of the flow structure. This approach could replicate the experimental results with a good accuracy. Other relative permeability models (viscous coupling model, X curve model, and Corey curve model) were also compared. Except for the viscous coupling model, these models did not interpret the experimental relative permeabilities as well as the proposed tortuous channel model. Hence we concluded that the two-phase relative permeability in fractures depends not only on liquid type and fracture geometry but also on the structure of the two-phase flow.