In this paper, experiments and numerical modeling are used to quantify the effects of clearance and eccentricity on compressor performance and to examine the influence of each on flow distribution and stall margin. A change in the size of the tip-clearance gap influences the pressure rise and the stall margin of a compressor. Eccentricity of the tip-clearance gap then further exacerbates the negative effects of increasing tip-clearance. There are few studies in the literature dealing with the combined effect of clearance and eccentricity. There is also little guidance for engine designers, who have traditionally used rules of thumb to quantify these effects. One such rule states that the stall margin of an eccentric machine will be equal to that of a concentric machine with uniform clearance equal to the maximum eccentric clearance. In this paper, this rule of thumb is checked using experimental data and found to be overly pessimistic. In addition, eccentric clearance causes a variation in axial velocity around the circumference of the compressor. The current study uses a three-dimensional model which demonstrates the importance of radial flow gradients in capturing this redistribution. Flow redistribution has been treated analytically in the past, and for this reason, previous modeling has been restricted to two dimensions. The circumferential variation in axial velocity is also examined in terms of the local stability of the flow by considering the stalling flow coefficient of an equivalent axisymmetric compressor with the same local tip-clearance. The large clearance sector of the annulus is found to operate beyond its equivalent axisymmetric stall limit, which means that the small clearance sector of the annulus must be stabilizing the large clearance sector. An improved rule of thumb dealing with the effects of eccentricity is presented.