Production of Virgin Coconut Oil generates huge volumes of whey, a rich source of proteins, which is currently discarded as effluent or at best underutilized. Recovery of these proteins is a value addition improving the overall economics of the process. Aqueous two phase extraction was employed to recover these proteins from coconut whey. Besides the selection of phase forming salt and polymer molecular weight, the effect of various parameters such as tie line length (%TLL), volume ratio and pH was studied. Polyethylene glycol 6000/potassium phosphate system (5%/12% w/w, 0.2 vol ratio and 8.0 pH) was observed to be the most suitable system resulting in a recovery of 92.65% (w/w) in the salt-rich phase. Differential partitioning of protein and fat to the opposite phases (examined by phase contrast microscopy) was achieved at these conditions which facilitated the recovery of protein devoid of fat. A mechanism for the differential partitioning of whey proteins and oils is also proposed.