Knowledge of flow pattern and flow pattern transitions is essential to the development of reliable predictive tools for pressure drop and heat transfer in two-phase micro-channel heat sinks. In the present study, experiments were conducted with adiabatic nitrogen-water two-phase flow in a rectangular micro-channel having a 0.406 × 2.032 mm cross-section. Superficial velocities of nitrogen and water ranged from 0.08 to 81.92 m/s and 0.04 to 10.24 m/s, respectively. Flow patterns were first identified using high-speed video imaging, and still photos were then taken for representative patterns. Results reveal that the dominant flow patterns are slug and annular, with bubbly flow occurring only occasionally; stratified and churn flow were never observed. A flow pattern map was constructed and compared with previous maps and predictions of flow pattern transition models. Annual flow is identified as the dominant flow pattern for conditions relevant to two-phase micro-channel heat sinks, and forms the basis for development of a theoretical model for both pressure drop and heat transfer in micro-channels. Features unique to two-phase micro-channel flow, such as laminar liquid and gas flows, smooth liquid-gas interface, and strong entrainment and deposition effects are incorporated into the model. The model shows good agreement with experimental data for water-cooled heat sinks.