Abstract Aphron drilling fluids, which are highly shear-thinning water-based fluids containing stabilized air-filled bubbles (aphrons), have been applied successfully worldwide to drill depleted reservoirs and other high-permeability formations. Although the performance of these fluids in the field is well documented, questions remain about how such fluids work. A study was initiated this past year under the auspices of the U.S. Department of Energy to develop some understanding of the mechanisms by which these fluids can seal loss zones with little permanent formation damage. Among the key findings of this on-going project is that aphrons can survive elevated pressures for a much longer time than conventional bubbles, though they appear to be fairly sensitive to shear. In a loss zone, aphrons that survive the trip downhole can migrate faster than the base liquid and concentrate at the fluid front, thereby building an internal seal in the pore network of the rock. A microgel network formed by particulates in the drilling fluid aids the aphrons in slowing the rate of invasion, as does, of course, the radial flow pattern of the invasion. As the fluid slows, the very high LSRV (low-shear-rate viscosity) of the base fluid becomes increasingly important; this high LSRV, coupled with low thixotropy, enables the fluid to generate high viscosity rapidly. Bridging and formation of a low-permeability external filter cake also occur during the latter part of this period, ultimately reducing the rate of invasion to that of ordinary fluid loss. Another key finding is that aphrons have very little attraction for each other or for mineral surfaces. Consequently, they do not readily coalesce nor do they stick easily to the pore walls, resulting in easy displacement by the produced fluids. In addition, the drilling fluid itself is very compatible with produced fluids and generates low capillary forces, thereby facilitating back-flow of produced fluids. The combination of these two effects is expected to result in low formation damage and minimal requirements for cleanup.