Experiments were conducted to study the fluid dynamics in the case that slug flow occurs in the riser of an external-loop gas-lift system with a restriction section located in the downcomer. Complex fluctuation behaviors of the liquid circulation velocity and the wall shear stress in the riser were observed and discussed. Based on the slug flow hydrodynamic behaviors and the balance of momentum and pressure drop over the circulating loop, a model was developed to predict the main parameters of the system: the liquid circulation velocity, the void fraction, the length and velocities of Taylor bubbles and liquid slugs. The predicted results of these parameters were compared with the experimental data and a good agreement was obtained.