This paper reports a novel hydrodynamic technique for sorting of droplets and cells based on size and deformability. The device comprises two modules: a focusing and spacing control module and a sorting module. The focusing and spacing control module enables focusing of objects present in a sample onto one of the side walls of a channel with controlled spacing between them using a sheath fluid. A 3D analytical model is developed to predict the sheath-to-sample flow rate ratio required to facilitate single-file focusing and maintain the required spacing between a pair of adjacent objects. Experiments are performed to demonstrate focusing and spacing control of droplets (size 5-40 μm) and cells (HL60, size 10-25 μm). The model predictions compare well with experimental data in terms of focusing and spacing control within 9%. In the sorting module, the main channel splits into two branch channels (straight and side branches) with the flow into these two channels separated by a "dividing streamline". A sensing channel and a bypass channel control the shifting of the dividing streamline depending on the object size and deformability. While resistance offered by individual droplets of different sizes has been studied in our previous work (P. Sajeesh, M. Doble and A. K. Sen, Biomicrofluidics, 2014, 8, 1-23), here we present resistance of individual cells (HL60) as a function of size. A theoretical model is developed and used for the design of the sorter. Experiments are performed for size-based sorting of droplets (sizes 25 and 40 μm, 10 and 15 μm) and HL60 cells (sizes 11 μm and 19 μm) and deformability-based sorting of droplets (size 10 ± 1.0 μm) and polystyrene microbeads (size 10 ± 0.2 μm). The performance of the device for size- and deformability-based sorting is characterized in terms of sorting efficiency. The proposed device could be potentially used as a diagnostic tool for sorting of larger tumour cells from smaller leukocytes. © The Royal Society of Chemistry 2015.