Micro particle image velocimetry (PIV) characterization of two-fluid flow in a microchannel was analysed focusing on the effect of differences in the refractive indices of the two fluids on the accuracy of the PIV data. In the present study, we first analysed the objective-imaging system used for two-fluid flow measurement, and then derived the precondition for measurement of a valid velocity profile across the two-fluid interface. A micro PIV experimental system was set up to measure the two-fluid flow inside a Y-shaped microchannel. Using this system, the two-fluid flow of two glycerol-water mixtures with different glycerol mass concentrations (phi) was measured for three cases (phi = 0 and phi = 0.2; phi = 0.1 and phi = 0.5; and phi = 0 and phi = 0.6). The resulting experimental data agreed well with numerical predictions.