A number of physicochemical phenomena take place in a direct ethanol fuel cell (DEFC), including momentum and mass transfer, electrochemical reactions, and gas-liquid flow in anode and cathode channels. Mathematical description of momentum and mass transfer processes in gas –liquid flows is generally based on a two-phase model. This model assumes that two-phase flow is incompressible and homogeneous. The governing equations include conservation of mass, momentum and energy. The conventional CFD-based model of DEFC requires experimental correlations for closure of multiphase model equations prior numerical solution. Empirical correlations limit application of conventional submodels for interface transfer in two-phase flow in a DEFC. The objective of this research is to modify 3D DEFC model to predict the cell performance, temperature and concentration profiles taking into account two-phase flow in anode and cathode channels. The improved DEFC model includes a new submodel for interface mass transfer developed without using empirical correlations. Fuel cell performance and distribution of temperature depend on numerous transport phenomena including charge-transport, mass and heat transfer. The design of a DEFC requires an understanding of processes such as mass, momentum transport, electrochemical reactions, and charge balance taking place inside the fuel cell. The model reflects the influence of various parameters on fuel cell performance including flow field design, porosity, polymer properties and other. The model is useful for the basic understanding of three dimensional transport and electrochemical phenomenon in DEFC and for the optimization of cell design and operating conditions.