This paper is devoted to measuring water holdup of oil-water two-phase flow with low velocity using a coaxial capacitance sensor. We first investigated the distribution characteristics of the coaxial capacitance sensor via the finite element method (FEM) and optimized its geometry size. Afterward, we carried out a vertical upward oil-water two-phase flow experiment in a pipe with a 20-mm inner diameter (ID) to obtain the responses of four flow patterns: transition flow (TF), dispersed oil-in-water slug flow (D OS/W), dispersed oil-in-water flow (D O/W) and very fine dispersed oil-in-water flow (VFD O/W). The sensor outputs were normalized to equivalent water holdup and compared with the set values from a quick closing valve (QCV) method. Finally, we studied the time-frequency dynamic characteristics of different flow patterns based on the Adaptive Optimal Kernel Time-Frequency Representation (AOK-TFR) algorithm to further analyze the evolution of oil-water two-phase flow with low velocity. The results show that the coaxial capacitance sensor can be effectively applied in the measurement of water holdup under moderate and low water-cuts as well as uncovering discrepancies regarding different flow patterns.