The mechanisms of multiple stepwise drop-interface coalescence have been investigated for liquid-liquid systems both with and without surfactant. It was observed that both the coalescence time and the number of coalescence steps depend on the initial drop size and the surfactant concentration. Without surfactant, the drop lifetime decreases as the drop size decreases while, in the presence of surfactant, the drop lifetime increases with decreasing drop size. These observations are explained on the basis of thin Liquid film stability and film drainage mechanisms, and it is shown that drop lifetime versus size is governed by the thermodynamic stability of the film rather than film drainage and is dependent on film size and capillary pressure. Film stability is analyzed on the basis of both the concepts of mechanical perturbations and nucleation (hole formation). It is concluded that the experimental data for film lifetime versus film size is in qualitative agreement only with the nucleation mechanism. The mechanism of secondary drop formation from the primary drop and its drainage is interpreted by the Rayleigh capillary instability mechanism, and the effect of interfacial tension on the size of the secondary drop is also analyzed.