Abstract: Separation of lubricating oil, entrained in the discharge gas produced by a rotary vane compressor, is achieved in a relatively small space by initially passing the oil-laden discharge gas through a first closed chamber, containing an oil separating element, to form a stream of gas having some of its oil removed and having a desired velocity uniformly distributed across the stream's cross section. The gas stream is then circulated within a second and larger closed chamber where the remaining oil is separated out by gravity settling and impingement on the second chamber's walls. The separated oil collects in a reservoir at the bottom of the second chamber to form an oil pool. The oil-free discharge gas exits through an outlet in the second chamber.