Results are presented for the initiation of slug-type structures from stratified 2D, two-layer pressure-driven channel flow. Good agreement is obtained with an Orr-Sommerfeld-type stability analysis for the growth rate and wave speed of very small disturbances. The numerical results elucidate the non-linear evolution of the interface shape once small disturbances have grown substantially. It is shown that relatively short waves (which are the most unstable according to linear theory) saturate when the length of the periodic domain is equally short. In longer domains, coalescence of short waves of small-amplitude is shown to lead to large-amplitude long waves, which subsequently exhibit a tendency towards slug formation. The non-uniform distribution of the interfacial shear stress is shown to be a significant mechanism for wave growth in the non-linear regime. (c) 2007 Elsevier Ltd. All rights reserved.