Periodic dynamic loadings may cause dynamic instability of a structure through parametric resonance. In this paper, a B-spline finite strip method (FSM) is presented for the dynamic instability analysis of composite laminated rectangular plates and prismatic plate structures, based on the use of first-order shear deformation plate theory (SDPT). The equations of motion of a structure are established by using Lagrange's formulation and they are a set of coupled Mathieu equations. The boundary parametric resonance frequencies of the motion are determined by using the method suggested by Bolotin through a novel development which incorporates the Sturm sequence method and the multi-level substructuring technique to achieve reliability, efficiency and accuracy. Various loading patterns, arbitrary lamination and general boundary conditions are accommodated. A variety of numerical applications is presented to test the developed method and to study the dynamic instability behaviour of single plates and of complicated plate structures under various types of dynamic loading. A dynamic instability index (DII) is devised to measure the degree of instability against certain parameters which include the thickness-to-length ratio, the degree of orthotropy, the fibre orientation, the loading pattern and the boundary conditions.