Flow and mixing in the small intestine are multi-scale processes. Flows at the scale of the villi (finger-like structures of ≈500 μm length) are poorly understood. We developed a three-dimensional lattice-Boltzmann model to gain insight into the effects of villous movements and the rheology of digesta on flow, mixing and absorption of nutrients at the periphery of the intestinal lumen. Our model simulated the hydrodynamic consequences of villi movements that resulted from folding of the mucosa during longitudinal contractions. We found that cyclic approximation and separation of groups of villi generated laminar eddies at the edges of the group and augmented mass transfers in the radial direction between the inter-villous space and the intestinal lumen which improved the absorption of nutrients and mixing at the periphery of the lumen. This augmentation was greater with highly diffusible nutrients and with high levels of shear-thinning (pseudoplasticity) of the fluid. We compared our results with bulk flows simulations done by previous workers and concluded that villous movements during longitudinal contractions is a major radial mixing mechanism in the small intestine and increases mixing and absorption around the mucosa despite adverse rheology.