This paper describes the design and construction of a dynamic flow apparatus for the measurement of air entrainment and release characteristics of lubricants, specifically automatic transmission fluids. Data are provided on test method development and correlation with transmission cycling tests. The results obtained using this apparatus and method are compared with those obtained from readily available, and newly developed, foaming and air entrainment tests. The existing tests give an inconsistent picture of fluid foaming and air entrainment characteristics. Foaming tests contained in the major ATF service fill specifications have been found incapable of identifying lubricants with poor fluid level control in an automatic transmission cycling test. The newly developed dynamic flow apparatus is capable of correctly ranking the fluid level control of tested lubricants as determined in the transmission cycling test.