Abstract: Core-annular flow generator is an important device to transport heavy oil with core-annular flow. In order to improve the stability of core-annular flow while increasing the efficiency of oil transportation, it is crucial to optimize the structure of core-annular flow generator. In this paper, the drag reduction mechanism of the transportation of heavy oil with core-annular flow was analyzed, and the structure optimization of core-annular flow generator was numerically investigated. The simulation was carried out in Volume of Fluid (VOF) model, and a numerical model of core-annular flow was established and verified. The effect on the stability of core-annular flow generator by its clearance thickness was studied, and the influence of the clearance size of core-annular flow generator on the oil transportation efficiency of water-annular flow was discussed. Thus, the optimal clearance thickness of core-annular flow generator was obtained. It is indicated that there is an optimal value of clearance thickness. If the clearance thickness is too small, it is not conductive to the formation and stability of core-annular flow, and if it is too large, the oil transportation efficiency will be reduced. The research results provide the theoretical guidance for the transportation of high viscosity oil with water-annular flow.