An annular liquid jet in a compressible gas medium has been examined using an Eulerian approach with mixed-fluid treatment. The governing equations have been solved by using highly accurate numerical methods. An adapted volume of fluid method combined with a continuum surface force model was used to capture the gas-liquid interface dynamics. The numerical simulations showed the existence of a recirculation zone adjacent to the nozzle exit and unsteady large vortical structures at downstream locations, which lead to significant velocity reversals in the flow field. It was found that the annular jet flow is highly unstable because of the existence of two adjacent shear layers in the annular configuration. The large vortical structures developed naturally in the flow field without external perturbations. Surface tension tends to promote the Kelvin-Helmholtz instability and the development of vortical structures that leads to an increased liquid dispersion. A decrease in the liquid sheet thickness resulted in a reduced liquid dispersion. It was identified that the liquid-to-gas density and viscosity ratios have opposite effects on the flow field with the reduced liquid-to-gas density ratio demoting the instability and the reduced liquid-to-gas viscosity ratio promoting the instability characteristics. (c) 2007 Elsevier Ltd. All rights reserved.