Safety, comfort and high-efficiency in marine systems are becoming strongly needed in recent years. For the design of the functional systems such as smoke control of marine fire and purging of gases in a tank, it is often required to solve the problem of two horizontal flows with different densities. In the case of the lower stream with the greater density, the flow is stably stratified under some conditions. If this phenomenon occurs, the efficiency of the gas purging in an enclosed space may be seriously reduced. Acquiring an extensive knowledge of such stratified flow is therefore necessary. In this paper, the stability of the stratified horizontal shear layer between two uniform streams is investigated by numerical simulation. The numerical method is a control volume method in which the SIMPLE procedure is applied and the QUICK scheme is used for convection term. The development of the Kelvin-Helmholtz (K-H) instability is simulated to show that the shear layer becomes unstable, rolls up into billows and collapses finally. The secondary Kelvin-Helmholtz instability is also observed in the simulation results in a case of high Reynolds number flow. The effects of Richardson number and Reynolds number on the stratified shear flow are investigated and it is found that Richardson number is the dominant parameter for Kelvin-Helmholtz instability. Finally, the unstable region of the stratified flow, which is governed by Richardson number and Reynolds number, is presented from the numerical simulation results.