A theory is developed to describe a structural instability that has been observed during the sedimentation of particulate suspensions through viscoelastic fluids. The theory is based on the assumption that the influence of hydrodynamic interactions in viscoelastic fluids, which tend to cause particles to aggregate, is in competition with hydrodynamic dispersion, which acts to maintain a homogeneous microstructure. In keeping with the experimental observations, it predicts that the suspension structure will stratify into vertical columns when a dimensionless stability parameter exceeds a critical value. The column-to-column separation, measured in particle radii, is predicted to be proportional to the square root of the ratio of the dimensionless dispersion coefficient to the product of the particle volume fraction and the Deborah number. The time for the formation of the columns is predicted to scale with the inverse of the average volume fraction. These predictions are in agreement with experimental data reported in the literature. (c) 2010 Elsevier B.V. All rights reserved.