A 3D ALE Finite Element Method is developed to study two-phase flow phenomena using a new discretization method to compute the surface tension forces. The computational method is based on the Arbitrary Lagrangian-Eulerian formulation (ALE) and the Finite Element Method (FEM), creating a two-phase method with an improved model for the liquid-gas interface. An adaptive mesh update procedure is also proposed for effective management of the mesh to remove, add and repair elements, since the computational mesh nodes move according to the flow. The ALE description explicitly defines the two-phase interface position by a set of interconnected nodes which ensures a sharp representation of the boundary, including the role of the surface tension. The proposed methodology for computing the curvature leads to accurate results with moderate programming effort and computational cost. Static and dynamic tests have been carried out to validate the method and the results have compared well to analytical solutions and experimental results found in the literature, demonstrating that the new proposed methodology provides good accuracy to describe the interfacial forces and bubble dynamics. This paper focuses on the description of the proposed methodology, with particular emphasis on the discretization of the surface tension force, the new remeshing technique, and the validation results. Additionally, a microchannel simulation in complex geometry is presented for two elongated bubbles. (C) 2014 Elsevier Inc. All rights reserved.