An air dryer assembly for removing moisture and oil from a compressed air system includes a desiccant material received in a shell for adsorbing moisture as compressed air passes therethrough. A coalescing element is disposed between an inlet and outlet for removing oil aerosols from the compressed air. A check valve is disposed in parallel with the coalescing element and forces the compressed air to pass through the coalescing element as air flows from the inlet to the outlet. During a purge or reverse flow, compressed air bypasses the coalescing element and removes oil collected in the cartridge through the inlet.