Abstract: A linearized instability analysis of Taylor-Couette flow between two rotating concentric cylinders of an electrorheological (ER) fluid is carried out. The ER fluid exhibits a yield stress in addition to the plastic viscosity when an extra electric-field is applied. It can be found that the yield stress plays a dual role in the flow instability. The possibility of the yield surface falling between the cylinders is analysed. Although small waves appeared on the yielded surface is considered, the yielded surface, which has been treated as a free surface, has little effect on the flow instability. The effects of axisymmetric perturbation on the flow instability are presented due to the axisymmetric of the basic flow. The parameter β in the yield stress formula of the ER fluid is shown to have distinct effects on the flow instability characteristics.