This paper aims to investigate the effects of various pararneters on stability behavior and entropy generation through a two-phase natural circulation loop. Two-phase natural circulation systems have low driving head and, consequently, low heat removal capability. To have a higher thermodynamic efficiency, in addition to the stability analysis, minimization of entropy generation by loop should be taken into account in the design of these systems. In the present study, to investigate the stability behavior, the non-linear method (known as the direct solution method or time domain method) which is able to simulate the uniform and non-uniform diameter loops, was applied. To best calculate entropy generation rates, the governing equations of the entropy generation were solved analytically. The effects of various parameters such as operating conditions and geometrical dimensions on the stability behavior and the entropy generation in the two-phase natural circulation loop were then analyzed. (C) 2015 Elsevier Ltd. All rights reserved.