The streamwise development of interfacial wave structure of downward annular two-phase flow was studied experimentally, by measuring instantaneous liquid film thickness at six different locations. It was found that the wave height increased with axial distance, while the wave frequency did not change remarkably. Numerical and theoretical analyses were carried out to predict the characteristics of two typical types of annular two-phase flow heat transfer problems: evaporative heat transfer in a downward air-water annular two-phase flow, and forced-convection filmwise condensation. Governing equations for each phase were solved simultaneously with a finite difference scheme. A simple model, directly expressing the heat and momentum transfer augmentation by the interfacial waves, was employed in the analyses. The computed results of heat transfer coefficient and liquid film thickness showed fairly good agreement with available experimental counterparts. The effectiveness of both the model and the calculation process is suggested. Instability of interface and characteristics of interfacial waves are also discussed.