Experimental investigations were carried out to study the effect of tip clearance (between impeller and stationary shroud) in a mixed-flow compressor stage. Two configurations, namely constant and variable clearance gaps, between impeller and stationary shroud were considered. For the purpose of the present investigations, a mixed-flow compressor stage was designed, fabricated, and experimentally evaluated. The flow investigations were carried out in a closed-circuit compressor rig. Detailed steady and unsteady flow measurements were carried out for three clearance gaps, namely 0.5 mm, 0.75 mm, and 0.9 mm. Through the experimental investigations, it was found that the constant tip-clearance configurations showed better performance in terms of pressure ratio and efficiency as compared to variable clearance configurations. For a given configuration, the pressure ratio and efficiency of the stage decrease with increase in the tip gap without indicating any optimum value. Tip-clearance flow had considerable effect on the flow through the diffuser. © IMechE 2014.