This paper presents a fundamental study of the flow dynamics and heat transfer induced by a slug flow under saturated flow boiling in a circular microchannel. Numerical simulations are carried out by utilizing the commercial CFD solver ansys fluent v. 14.5, with its built-in volume of fluid (VOF) method to advect the interface, which was improved here by implementing self-developed functions to model the phase change and the surface tension force. A continuous stream of bubbles is generated (by additional user-defined functions) by patching vapor bubbles at the channel upstream with a constant generation frequency. This modeling framework can capture the essential features of heat transfer in slug flows for a continuous stream of bubbles which are here investigated in detail, e.g., the mutual influence among the growing bubbles, the fluid mechanics in the liquid slug trapped between two consecutive bubbles, the effect of bubble acceleration on the thickness of the thin liquid film trapped against the channel wall and on other bubbles, and the transient growth of the heat transfer coefficient and then its periodic variation at the terminal steady-periodic regime, which is reached after the transit of a few bubble–liquid slug pairs. Furthermore, the results for a continuous stream of bubbles are found to be quite different than that of a single bubble, emphasizing the importance of modeling multiple bubbles to study this process. Finally, the outcomes of this analysis are utilized to advance a theoretical model for heat transfer in microchannel slug flow that best reproduces the present simulation data.