A general transition criterion is proposed in order to locate the core-annular flow pattern in horizontal and vertical oil-water flows. It is based on a rigorous one-dimensional two-fluid model of liquid-liquid two-phase flow and considers the existence of critical interfacial wave numbers related to a non-negligible interfacial tension term to which the linear stability theory still applies. The viscous laminar-laminar flow problem is fully resolved and turbulence effects on the stability are analyzed through experimentally obtained shape factors. The proposed general transition criterion includes in its formulation the inviscid Kelvin-Helmholtz's discriminator. If a theoretical maximum wavelength is considered as a necessary condition for stability, a stability criterion in terms of the Eotvos number is achieved. Effects of interfacial tension, viscosity ratio, density difference, and shape factors on the stability of core-annular flow are analyzed in detail. The more complete modeling allowed for the analysis of the neutral-stability wave number and the results strongly suggest that the interfacial tension term plays an indispensable role in the correct prediction of the stable region of core-annular flow pattern. The incorporation of a theoretical minimum wavelength into the transition model produced significantly better results. The criterion predictions were compared with recent data from the literature and the agreement is encouraging. (C) 2007 American Institute of Chemical Engineers.