Clad sheets with stacked dissimilar metal layers are used in various industries. Layers often deform non-uniformly during cold rolling in manufacturing processes. Criteria for onset of this plastic instability has not been fully understood. In this study, one-pass cold rolling of three-layered sheet having hard inner layer and soft outer layers has been analyzed by the elastic-plastic finite element method. As a result, periodical necking of the inner layer is reproduced successfully. It is found that higher difference in flow stresses between layers and lower work hardening result in the periodical necking.