A coalescing filter is typically used in a compressed air system to remove liquid and oil aerosols. A coalescing filter is most efficient when located downstream of an air dryer. The air dryer removes most of the liquid oil condensed in the compressor discharge line. Measuring the percent of oil removed by a coalescing filter is useful for determining efficiency. This paper covers a laboratory method to reproduce oil aerosols much like the filter will see in an actual application. High duty cycles produce the maximum amount of oil from the compressor. The air dryer acts as pre-filter for the coalescing filter. The coalescing filter element and its associated housing should be tested as a unit since the element's inherent efficiency is effected by the design of the housing.