Narrow rectangular channels are employed in nuclear research reactors that use plate-type nuclear fuels, high heat-flux compact heat exchangers, and high-performance micro-electronics cooling systems. Two-phase flow in narrow rectangular channels is important, and it needs to be better understood because it is considerably different than that in round tubes. In this study, mechanistic models were developed for the flow regime transition criteria for various flow regimes in co-current air-water two-phase flow for vertical downward flow inside a narrow rectangular channel. The newly developed criteria were compared to a flow regime map of downward air-water two-phase flow inside a narrow rectangular channel with a 2.35-mm gap width under ambient temperature and pressure conditions. Overall, the proposed model showed good agreement with the experimental data.