Most of two-phase heat transfer analysis involve estimation of dry-out phenomenon in order to find whether it takes place and if so, at what location in the tube it will happen. Dry-out phenomenon considerably reduces heat transfer rate and it should be avoided as far as possible. Entrainment highly affects dry-out occurrence chance and location. Therefore a great attention should be paid on simulation of entrainment in order to have a good estimation of heat transfer and to safely design thermal systems.Although there are many models available for simulation of entrainment phenomenon, few are instrumentally employed in heat and fluid flow analyses, since most of those are empirical and limitedly can be applied due to the restricted conditions of experiments. There also are few theoretical approaches in the literature for simulating entrainment phenomenon by applying the physical potential of entrainment but some of those have a considerable deviation from the available empirical models. In the present study a conceptual approach is employed to simulate entrainment. In this regard the most important potential of this phenomenon, known as interfacial waves, are studied and modeled to find how they will lead to entrainment and how much the amount of entrainment is in vertical annular two-phase flows. An entrainment correlation is proposed at the end and will be compared with the available empirical ones for the verification objectives.