Shear-thinning effect of pure oil and distribution of bubble size are essential factors affecting the viscosity of bubbly oil. This study aims to establish an improved equivalent viscosity model for bubbly oil by considering the shear-thinning effect and the bubble distribution effect. Based on the equivalence principle of frictional resistance, the viscosity of pure oil considering the shear thinning effect is derived; based on the energy conservation principle, the viscosity increment due to bubble deformation is derived. A series of experiments, including generation of bubbly oil, bubble observation, and measurement of bubble oil viscosity, are conducted to validate the model established. The simulated and experimental results indicate that the improved equivalent viscosity model of bubbly oil is more accurate than the traditional model. Notably, the effect of oil shear thinning on the equivalent viscosity is much more obvious than the effect on the distribution of bubble size.