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Recent experimental work has shown that the pore-scale flow mechanism during steady-state two-phase flow in porous media is ganglion dynamics (GD) over a broad and practically significant range of the system parameters. This observation suggests that our conception and theoretical treatment of fractional flow in porous media need careful reconsideration. Here is proposed a mechanistic model of steady-state two-phase flow in those cases where the dominant flow regime is ganglion dynamics. The approach is based on the ganglion population balance equations in combination with a microflow network simulator. The fundamental information on the cooperative flow behavior of the two fluids at the scale of a few hundred pores is expressed through the system factors, which are functions of the system parameters and are calculated using the simulator. These system factors are utilized by the population balance equations to predict the macroscopic behavior of the process. The dependence of the conventional relative permeability coefficients not only on the wetting fluid saturation Sw but also on the capillary number, Ca, the viscosity ratio κ the wettability (θ0a, θ0r) the coalescence factor, Co, as well as the porous medium geometry and topology is explained and predicted on a mechanistic basis. Sample calculations have been performed for steady-state fully developed (SSFD) and steady-state nonfully developed (SSnonFD) flow conditions. The number distributions of the moving and the stranded ganglia, the mean ganglion size, the fraction of the nonwetting fluid in the form of mobile ganglia, the ratio of the conventional relative permeability coefficients and the fractional flows are studied as functions of the system parameters and are correlated with the flow phenomena at pore level and the system factors.