We present a detailed analysis of the two-point correlation function, from the 2dF Galaxy Redshift Survey (2dFGRS). We estimate the redshift-space correlation function, xi(s), from which we measure the redshift-space clustering length, s_0=6.82+/-0.28 Mpc/h. We also estimate the projected correlation function, Xi(sigma), and the real-space correlation function, xi(r), which can be fit by a power-law, with r_0=5.05+/-0.26Mpc/h, gamma_r=1.67+/-0.03. For r>20Mpc/h, xi drops below a power-law as is expected in the popular LCDM model. The ratio of amplitudes of the real and redshift-space correlation functions on scales of 8-30Mpc/h gives an estimate of the redshift-space distortion parameter beta. The quadrupole moment of xi on scales 30-40Mpc/h provides another estimate of beta. We also estimate the distribution function of pairwise peculiar velocities, f(v), including rigorously the effect of infall velocities, and find that it is well fit by an exponential. The accuracy of our xi measurement is sufficient to constrain a model, which simultaneously fits the shape and amplitude of xi(r) and the two redshift-space distortion effects parameterized by beta and velocity dispersion, a. We find beta=0.49+/-0.09 and a=506+/-52km/s, though the best fit values are strongly correlated. We measure the variation of the peculiar velocity dispersion with projected separation, a(sigma), and find that the shape is consistent with models and simulations. Using the constraints on bias from recent estimates, and taking account of redshift evolution, we conclude that beta(L=L*,z=0)=0.47+/-0.08, and that the present day matter density of the Universe is 0.3, consistent with other 2dFGRS estimates and independent analyses.
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