Flooded heat exchangers are often used in industry to reduce the required heat-transfer area and the size of utility control valves. These units involve a condensing vapor on the hot side that accumulates as a liquid phase in the lower part of the vessel. The heat transfer occurs mostly in the vapor space, but the condensate becomes somewhat subcooled before it leaves the heat exchanger. The analysis of the system is quite interesting for several reasons. The heat-transfer coefficients are different in the two phases. Heat-transfer areas in the two phases depend on the height of liquid. This paper demonstrates how this type of system can be studied using experimental data from a pilot-scale flooded heat exchanger. The experiment provides a mechanism for improving students' understanding of basic heat-transfer principles, particularly since phase changes must be considered.