This paper describes experiments and related modelling on a new method for separating aqueous phase slugs from the surrounding organic matrix phase in segmented two phase flow in a plastic microcapillary film (MCF). Kerosene or paraffin oil was metered through a plastic capillary of 630 microns diameter and aqueous phase slugs were generated within the capillary by the continuous sidestream injection of water. It was found that the resulting aqueous phase slugs formed in the MCF could be subsequently easily separated from the organic phase by piercing the downstream sidewall of the plastic capillary with a hydrophilic metal hypodermic needle to draw off an aqueous sidestream. Optical scrutiny of the phase separation process indicated that two distinct disengagement mechanisms are involved, in which the metal needle tip either remains submerged in the aqueous phase or becomes periodically exposed to the organic phase at certain stages of the segregation process. The separation efficiency, i.e. the degree of residual phase cross-contamination, was determined as a function of both the sidestream needle angle and the depth of needle penetration into the capillary for a given flow rate and phase ratio. It was established that the separation efficiency was very sensitive to the downstream pressure balance between the organic mainstream flow in the plastic capillary and the aqueous sidestream flow through the needle. A mathematical model for the pressure balance conditions was developed by making certain simplifying assumptions and taking the Laplace interfacial pressure into account. The model predictions agreed surprisingly well with the experimental findings, thus providing circumstantial evidence for the validity of the insights into the phase separation mechanism.