A mechanism has been elucidated for the coalescence-mediated break-up of bubbles in gas-liquid systems. Images taken from dynamic systems (a coalescence cell and laboratory-scale bubble columns) show that in some instances the coalescence of two bubbles is accompanied by the formation of a much smaller daughter bubble. Following the coalescence process an annular wave is formed due to the very rapid expansion of the hole following the instant of film rupture. As the wave moves along the length of the bubble, away from the point of rupture it causes a rippling effect which distorts the newly coalesced bubble and may result in the formation of an unstable extension. Instabilities due to the annular wave pinch off a portion of this extension, resulting in the generation of a small daughter bubble. In coalescence dominated systems the process results in the generation of significant numbers of bubbles much smaller (100-200 mum. diameter) than the Sauter mean diameter (3-4 mm).