Effective refrigerant and oil separation is must for reliable and energy efficient chiller operation. Type A is a conventional oil separator design having a larger shell diameter and single refrigerant outlet connected to condenser using a discharge piping. Type B is novel oil separator design having a smaller shell diameter and two refrigerant outlets connected to the condenser. The CFD simulation of both designs is done for comparing oil separation efficiencies, velocity distribution, pressure drop and oil droplet trajectories. The simulated pressure drop matches closely (< 5%) with experimental results in both designs. Type A design has higher (10912 Pa) pressure drop than Type B design. Simulation shows both the designs have almost equivalent oil separation efficiency at and above 25 μm oil droplet sizes. Below 25 μm oil droplet sizes, the Type B design has better oil separation efficiency. Chiller with Type B design has better oil circulation rates in liquid refrigerant than the chiller with Type A design at maximum flow rate condition. Therefore, Type B oil separator is found to be superior in performance (lower pressure drop and lower oil circulation rates) at lesser cost. Chiller with Type B oil separator is having 0.5% more refrigeration capacity, 1.6% higher COP and 1.1% lower power consumption than chiller with Type A oil separator.