This paper deals with thermally induced meniscus oscillations in a two-phase system consisting of a liquid plug and a vapor bubble in a capillary tube of circular cross section. This system represents the simplest version of a heat transfer device called ''pulsating heat pipe" (PHP). Our purpose is to gain fundamental understanding of the physical processes that cause self-sustained thermally driven oscillations. A visualization experiment is performed and the oscillations of the liquid-vapor meniscus and the vapour pressure are observed. We propose next a theoretical model. It differs from existing models by the account of the two-phase equilibrium that occurs locally at the vapor-liquid interface and by introduction of the time varying wetting films through which the major part of the heat and mass transfer occurs. Results from the proposed model show a good agreement with the experiment.