The effects of a return channel with splitter vanes on the performance of a multistage centrifugal compressor were investigated. As a preliminary study, the optimum location of the splitter vanes was numerically examined with the aim of achieving high overall efficiency. The results indicated that the optimum location was the 30% of the normalized pitchwise distance from the suction side of the main vane, with the leading-edge located at a radius ratio to the main vane trailingedge of 1.77. To investigate the effects of the return channel with and without the optimum splitter vanes on the overall performance, performance tests were carried out using a oneand-half-stage test rig. Three pre-swirl vanes, whose vane angles from the tangential direction at the trailing-edge were 20, 30 and 40° were used to simulate three operating conditions with low, design and high flow coefficients, respectively. The design flow coefficient of the downstream impeller was 0.073 and the peripheral Mach number was 0.87. The test results showed that the return channel with the optimum splitter vanes achieved 11.8% higher overall efficiency at the high flow coefficient with respect to the case without the splitter vanes while maintaining the same efficiency at both low and design flow coefficients. The return channel with the optimum splitter vanes was concluded to be effective for improving the efficiency of a multistage centrifugal compressor.