The effect of temperature difference (Tsat − Tcoolant) on condensation heat transfer coefficients inside horizontal tubes is investigated in detail. Condensation experiments are conducted on propane inside a 7.75 mm horizontal tube at four temperature differences between the test fluid and coolant at three mass fluxes and four saturation temperatures. The heat transfer coefficient is shown to increase with temperature difference, with this effect diminishing with larger temperature differences, and being most significant at higher saturation temperatures. Heat transfer coefficients at the low-reduced pressures (Pr = 0.25) corresponding to lower saturation temperatures (30 °C) are mostly unaffected by the temperature difference. Subcooling of the condensate is expected to increase heat transfer coefficients at the larger temperature differences. Flow visualization studies are used to explain the inadequacy of the Nusselt film theory for the conditions investigated. The underlying mechanisms are also used to explain why the correlations from the literature do not predict the observed trend, and a new correlation to account for the effect of temperature difference is developed.