Drag-reducing polymers (DRPs) significantly increase blood flow, tissue perfusion, and tissue oxygenation in various animal models. In rectangular channel microfluidic systems, DRPs were found to significantly reduce the near-wall cell-free layer (CFL) as well as modify traffic of red blood cells (RBC) into microchannel branches. In the current study we further investigated the mechanism by which DRP enhances microvascular perfusion. We studied the effect of various concentrations of DRP on RBC distribution in more relevant round microchannels and the effect of DRP on CFL in the rat cremaster muscle in vivo. In round microchannels hematocrit was measured in parent and daughter branch at baseline and after addition of DRP. At DRP concentrations of 5 and 10 ppm, the plasma skimming effect in the daughter branch was eliminated, as parent and daughter branch hematocrit were equivalent, compared to a significantly lowered hematocrit in the daughter branch without DRPs. In anesthetized rats (N=11) CFL was measured in the cremaster muscle tissue in arterioles with a diameter of 32.6 ± 1.7 μm. In the control group (saline, N=6) there was a significant increase in CFL in time compared to corresponding baseline. Addition of DRP at 1 ppm (N=5) reduced CFL significantly compared to corresponding baseline and the control group. After DRP administration the CFL reduced to about 85% of baseline at 5, 15, 25 and 35 minutes after DRP infusion was complete. These in vivo and in vitro findings demonstrate that DRPs induce a reduction in CFL width and plasma skimming in the microvasculature. This may lead to an increase of RBC flux into the capillary bed, and thus explain previous observations of a DRP mediated enhancement of capillary perfusion.