The concentric, two-phase flow of two immiscible fluids in a tube of sinusoidally varying cross-section is studied. This geometry is often used as a model to study the onset of different flow regimes in packed beds. Neglecting gravitational effects, the model equations depend on five dimensionless parameters: the Reynolds and Weber numbers, and the ratios of density, viscosity and volume of the two fluids. Two more dimensionless numbers describe the shape of the solid wall: the constriction ratio and the ratio of its maximum radius to its period. In addition to the effect of the Weber number, which depends on both the fluid and the flow, the effect of the Ohnesorge number J has been examined as it characterizes the fluid alone. The governing equations are approximated using the pseudo-spectral methodology while the Arnoldi algorithm has been implemented for computing the most critical eigenvalues that correspond to axisymmetric disturbances. Stationary solutions are obtained for a wide parameter range, which may exhibit flow recirculation at the expanding portion of the tube. Extensive calculations are made for the dependence of the neutral stability boundaries on the various parameters. In most cases where the steady solution becomes unstable it does so through a Hopf bifurcation. Exceptions to this are cases where the viscosity ratio is O(10−3) and, then, the most unstable eigenvalue remains real. Generally, steady core–annular flow in this geometry is more susceptible to instability than in a straight tube and, in similar ranges of the parameters, it may be generated by different mechanisms. Decreasing the thickness of the annular fluid, inverse Weber number or the Ohnesorge number or the density of the core fluid stabilizes the flow. For stability reasons, the viscosity ratio must remain strictly below unity and it has an optimum value that maximizes the range of allowed Reynolds numbers.