The corrosion of steel surfaces has been examined in a two-phase environment of aqueous solution dispersed in hydrocarbon. The environment considered simulates that which can be encountered in engine systems where the lubricating oil can become contaminated with entrained corrosive aqueous droplets. On account of the complicated nature of the environment, involving as it does the effect of turbulence, aeration, and varying composition of the two liquid phases, surface-chemical aspects assume an important role. The problem cannot readily be treated by conventional electrochemical techniques. Amongst the factors that can influence corrosion in this system is the case with which an entrained aqueous droplet can make contact with the metal surface through the intervening oil phase. The process of wetting by the aqueous phase is considered from a hydrodynamic and thermodynamic standpoint. Certain conclusions resulting from these basic considerations have been confirmed experimentally both in static drop experiments and also in experiments under dynamic conditions resembling more closely the full-scale practical state. Resulting from this work, a novel system is proposed for characterizing the anti-rust performance of oils in this variable environment in terms of a “corrosion profile” and a critical pH value, pH c . Findings show that surfactant additives, included in an oil to impart such properties as dispersancy, anti-wear, etc., can, to a certain extent, contribute towards rust prevention and can thus supplement the effect of a specific anti-rust agent. The findings also provide an insight into the mechanism of rust prevention in this environment.