Heat transfer and flow characteristics of Taylor flows in vertical capillaries with tube diameters ranging from 0.5 mm to 2 mm were studied numerically with the volume of fluid (VOF) method. Streamlines, bubble shapes, pressure drops, and heat transfer characteristics of the fully developed gas–liquid Taylor flow were investigated in detail. The numerical data fitted well with experimental results and with the predicted values of empirical correlations. The results indicate that the dimensionless liquid film thickness and bubble rising velocity increase with increasing capillary number. Pressure drops in liquid slug region are higher than the single-phase flow because of the Laplace pressure drop. The flow pattern dependent model and modified flow separation model which takes Bond number and Reynolds number into account can predict the numerical pressure drops well. Compared with the single-phase flow, less time is needed for the Taylor flow to reach a thermal fully developed status. The Nusselt number of Taylor flow is about 1.16–3.5 times of the fully developed single-phase flow with a constant wall heat flux. The recirculation regions in the liquid and gas slugs can enhance the heat transfer coefficient and accelerate the development of the thermal boundary layer.