The process of two-phase natural convection in an annular channel formed between a heated hemispherical vessel and a surrounding thermal insulation structure is studied theoretically and experimentally. The flow, being driven by buoyancy, is induced entirely by the boiling process taking place on the downward-facing side of the channel, i.e., on the outer surface of the heated vessel. Results of the flow analysis and the experimental observations indicate that there is a strong interaction between the induced two-phase motion and the boiling process. While the mass flow rate of the induced flow is a strong function of the wall heat flux, the rate of boiling is significant affected by the resulting flow. Relative to the case without thermal insulation, a higher boiling heat transfer is obtained in the present case, evidently due to an enhanced mass flow rate induced by the boiling process with the presence of a thermal insulation structure.