An air-water two phase flow recirculating water test tunnel was constructed. This tunnel was designed and constructed to measure the performance of either an isolated hydrofoil or a cascade of hydrofoils under variable two phase condition. Void fraction measuring system using Point Electric Resistivity Probe was also developed. In this paper, the specification and the basic characteristics of the tunnel, such as the distribution of velocity, void fraction and bubble radius at the test section, are reported. As an example of test results, the distribution of void fraction behind an airfoil is shown.