The collision of two equi-sized drops immersed in an immiscible liquid phase undergoing a shear flow in a parallel plate apparatus has been investigated over a range of capillary numbers. The drops were observed along the vorticity direction of shear flow by video enhanced contrast optical microscopy. Images of the colliding drops were processed by image analysis techniques. The distance Δy between the drop centres along the velocity gradient direction was measured as a function of time during approach, collision and separation of the two drops. It was found that Δy increases irreversibly after collision, thus providing a mechanism for drop dispersion in a concentrated system. Drop shape evolution during collision was characterized by measuring a deformation parameter and the angle made by the drop major axis with respect to the velocity gradient direction. The extent of the near-contact region when the drops are sliding on each other was also estimated. Coalescence was a rare event and was observed in the extensional quadrant of the shear flow. The experimental results show good agreement with numerical simulations recently reported in the literature.