In the present work, utilizing the nonlinear equations of a prestressed thin elastic tube filled with an incompressible viscous fluid the propagation of weakly nonlinear waves in such a medium is studied. Considering that the arteries are initially subjected to a large static transmural pressure P-0 and an axial stretch lambda(z) and, in the course of blood flow, a finite time dependent displacement is added to this initial field, the nonlinear equations governing the motion of the tube in the radial direction is obtained. Utilizing the reductive perturbation technique the amplitude modulation of weakly nonlinear and dissipative but strongly dispersive waves is examined. The localized travelling wave solution to the evolution equation is given and the stability condition is discussed. (C) 1999 Elsevier Science Ltd. All rights reserved.