In this study, compound drops were generated by using a coaxial nozzle in which the outer tube and the inner tube delivered different liquids. In comparison with an emulsion drop, a water-in-oil compound drop consists of a water core and an oil shell. There is an interface between water and oil inside of the compound drop. Owing to this distinct nature, combustion characteristics and micro-explosion phenomena of compound drops were examined in this study. The liquid tested in the experiment included dodecane, hexadecane, 95.5% ethanol and water. The water content of water-in-dodecane compound drop (β12) varied from 25% to 85% in volume. The water content of water-in-hexadecane compound drop (β16) was fixed at 25% and 40% in volume. The ethanol content of ethanol-in-dodecane compound drop (βe) was fixed at 25% and 40% in volume. The drop diameter (di) and the drop spacing (S/di) was fixed at 500μm and 10, respectively. In the experiment, the variation of flame streak changed from yellow to blue flame with increasing the inner core water content of compound drop. The micro-explosion of compound drop had one model only. The micro-explosion phenomenon occurred because of bubble expansion from water (or ethanol) vapor inside the compound drop. The time history of micro-explosion from nucleation to bursting were in the order of βe > β12> β16. The micro-explosion intensity of compound drop were in the order βe ≤ β12< β16.