The modelling of interfacial shear stress is recognized as a problematic and controversial closure law in two-fluid models. Most previous studies have resorted to quasi-steady modelling of the interfacial shear. The present study attempts to propose a new form for interfacial shear, which incorporates an explicit functional dependence on the interface slope due to interfacial waviness. The implementation of the proposed model as a closure law in the stability analysis of stratified flows reveals the crucial role of the dynamic term in determining the stability characteristics. It is shown that, with the inclusion of the newly proposed dynamic term of interfacial shear, the stratified-smooth/stratified-wavy transitional boundary is satisfactorily predicted for a wide range of two-fluid systems.