This paper concerns with the numerical and experimental aspects of both steady and unsteady flow behavior in a centrifugal compressor with vaneless diffuser and downstream collector. Specifically, the appearance of flow instabilities i.e., rotating stall and surge is investigated in great detail. As the first step, the static performance of both stage and component was analyzed and possible root cause of system surge was put forward based on the classic stability theory. Then the unsteady pressure data was utilized to find rotating stall and surge in frequency domain which could be classified as mild surge and deep surge. With the circumferentially installed transducers at impeller inlet, backward travelling waves during stall ramp could be observed. The modes of stall waves could be clearly identified which is caused by impeller leading edge flow recirculation at Mu = 0.96. However, for the unstable flow at Mu = 1.08, the system instability seems to be caused by reversal flow in vaneless diffuser where the pressure oscillation was strongest. Thus steady numerical simulation were performed and validated with the experimental performance data. With the help of numerical analysis, the conjectures are proved.