The interfacial instability in the development of core-annular flow by the influence of the inlet nozzle in a horizontal pipe was investigated by computational fluid dynamics (CFD). The two-phase flow has been simulated using Volume-Of-Fluid model (VOF) and k-E turbulence model for the core (viscous oil) and the annular phase (water). The simulation results showed that by increasing the water input fraction, the interfacial instability appeared when the eccentricity of the core with an upward position and an oscillating position were generated by the input pressure, turbulent kinetic, and buoyancy force. In the development of the perfect core-annular flow an input concentric core changes to eccentric position with negligible turbulence. The onset of entrainment is formed by a reverse flow at the junction of the two-phase at the nozzle exit. The interfacial formation was analyzed using a proposed two-phase Froude number and modified Eotvos number involving the water input fraction.