Displacement of a liquid in a capillary tube by gas injection occurs in many situations, like enhanced oil recovery, coating of catalytic converters and gas-assisted injection molding. Generally the liquid being displaced is a polymeric solution or dispersion, which is not Newtonian. Viscoelastic forces alter the force balance in various parts of the flow and consequently change the amount of liquid left attached to the capillary wall. Models of such flows must rely on theories that can account for the different behavior of microstructured liquids in simple shear and extensional flow. Moreover, displacement flows involve a free surface, and the domain where the differential equations are posed is unknown a priori being part of the solution. These two characteristics make the problem extremely complex. This problem was analyzed here both by experiments and theory. The experiments consisted of flow visualization and measurement of mass displaced by a gas bubble in a capillary tube filled with a viscoelastic liquid. Various solutions of low molecular weight Polyethylene Glycol (PEG) and high molecular weight Polyethylene Oxide (PEO) in water were used in order to evaluate the effect of viscoelastic behavior on the flow. The rheological properties of the solutions were evaluated both in simple shear and predominantly extensional flows. In the theoretical analysis, the two- dimensional free surface flow near the gas-liquid interface was modelled using three different differential constitutive equations that approximate viscoelastic behavior of dilute polymer solutions, namely Oldroyd-B, FENE-P and FENE-CR, together with momentum and continuity equations. The equation system was solved with the Finite Element Method. The resulting non- linear system of algebraic equations was solved by Newton`s method. The results show the effect of the viscoelastic character of the liquid on the free surface shape and the film thickness attached to the capillary wall.