AbstractIn this paper, the local radial point interpolation meshless method (LRPIM) is used for the analysis of two‐dimensional potential flows, based on a local‐weighted residual method with the Heaviside step function as the weighting function over a local subdomain. Trial functions are constructed using radial basis functions. The present method is a truly meshless method based only on a number of randomly located nodes. Integration over the subdomains requires only a simple integration cell to obtain the solution. No element matrix assembly is required and no special treatment is needed to impose the essential boundary conditions. The novelty of the paper is the use of a local Heaviside weight function in the LRPIM, which does not need local domain integration and integrations only on the boundary of the local domains are needed. Effects of the sizes of local subdomain and interpolation domain on the performance of the present method are investigated. The behavior of shape parameters of multiquadrics has been systematically studied. Two numerical tests in groundwater and fluid flows are presented and compared with closed‐form solutions and finite element method. The results show that the use of a local Heaviside weight function in the LRPIM is highly accurate and possesses no numerical difficulties. Copyright © 2008 John Wiley & Sons, Ltd.