A CFD model based on water model experiments has been created to simulate slag entrainment and droplet formation. Multiphase Volume of Fluid (VOF) method is used to track the interface between slag and steel and User Defined File (UDF) code is applied to track separate droplets. Four oil–water systems and three slag–metal systems were simulated. The main objective of this research was to obtain droplet diameter distributions and the average droplet diameter in several different cases. With slag–metal cases the main interest was the effect of interfacial tension to droplet formation. With oil–water systems we studied the effect oil layer width and oil viscosity. The obtained droplet diameter distributions show that the dominant droplet size is 2–3 mm in every oil–water systems. In slag–metal systems the dominant size varies between 1–2 mm and 2–3 mm. The simulations show also that the average droplet size in all cases is 2.78–3.63 mm. The results were compared to the studies available in the literature.