Understanding the effects of spacer grids on the coolant flow through a nuclear reactor core is required for best-estimate design and analysis of the plant. The impact of a spacer grid on two-phase flows is of particular importance because the geometric effects of the grid can alter the two-phase flow structure and, consequently, the mass, momentum, and energy transfer characteristics. Therefore, a scaled separate-effects test facility is constructed to investigate the effects of a spacer grid on the hydrodynamics of air-water two-phase flow through a rod bundle. The test facility is scaled to maintain hydrodynamic and geometric similarity to single- and two-phase flows in a conventional pressurized water reactor and to facilitate detailed local measurements of two-phase flow parameters around the simulant fuel rods with a four-sensor conductivity probe. This paper presents measurements of local time-averaged two-phase flow parameters acquired upstream and downstream of the spacer grid with the conductivity probe in a representative subchannel of a 1×3 rod bundle for eight flow conditions. Characteristic features of the development of the two-phase flow parameters along the test section are discussed.