In refrigeration systems, oil is used to lubricate the moving parts of compressors. Unfortunately, oil is often miscible with refrigerants and it is inevitably discharged to condensers and evaporators. This article investigated the retention of oil in a microchannel-type condenser and evaporator of an R134a refrigeration system for light commercial refrigeration, vending machine, and water or wine cooler applications. The oil retention was measured and the effect of the oil, both retained and in circulation with the refrigerant inside the microchannel heat exchangers, on the heat transfer capacities and pressure drops were experimentally measured. Saturation temperatures were varied from −18 °C (0 °F) to 9 °C (48 °F) for the evaporator and from 35 °C (95 °F) up to 54 °C (130 °F) for the condenser. The oil concentration ranged from 0.5 wt% to 5 wt%. When combining both the microchannel condenser and evaporator, the overall oil retention volume resulted from 7% to 38% of the oil amount potentially charged inside compressors. The heat transfer capacity of the evaporator was penalized by 5% to 12%. Refrigerant-side pressure drops increased significantly and the system coefficient of performance was projected to decrease by more than 4%.