Condensation and its effects on turbo machinery operation are well understood and have been widely investigated. However, little scientific work on condensation in rotary positive displacement machines has been published. Since the robustness of screw expanders allows for expansion of slightly superheated vapours or even two-phase fluids, condensation on machine parts needs to be considered during design and simulation of these machines. In this paper the general effects of surface condensation of water on the machine parts of an idealised screw expander are discussed. Diabatic chamber model simulation is used for the thermodynamic simulation of operational behaviour. The effect of surface condensation on energy conversion and the delivered mass flow rate is analysed. Furthermore, a comparison of adiabatic and diabatic simulation of steam expansion in screw expanders is given in order to quantify condensation losses. Typical operating parameters are widely varied in simulation so as to identify influential factors on the condensation process. It is found that surface condensation, which is driven by heat exchange from the working fluid to adjacent machine parts, slightly raises the mass flow rate of the machine. For low expander speeds a reduction in isentropic efficiency can be expected due to a condensation induced pressure drop during the expansion phase.