The co-extrusion of multi-layer films has been studied with the focus on its process stability. As in the single-layer film casting process, the productivity of the industrially important multi-layer film casting and the quality of thus produced films have often been hampered by various instabilities occurring in the process including draw resonance, a supercritical Hopfbifurcation instability, frequently encountered when the draw ratio is raised beyond a certain critical value. In this study, this draw resonance instability along with the neck-in of the film width has been investigated for a three-layer film casting using a varying width non-isothermal 1-D model of the system with Phan-Thien and Tanner (PTT) constitutive equation known for its robustness in portraying extensional deformation processes. The effects of various process conditions, e.g., the aspect ratio, the thickness ratio of the individual film layers, and cooling of the process, on the stability have been examined through the nonlinear stability analysis.