The effect of the tip-shroud seal on the flutter onset of a shrouded turbine rotor blade, representative of a modern gas turbine, is numerically tested and the contribution to the work-per-cycle of the airfoil and the tip-shroud are clearly identified. The numerical simulations are conducted using a linearized frequency domain solver. The flutter stability of the shrouded rotor blade is evaluated for an edgewise mode and compared with the standard industrial approach of not including the tip-shroud cavity. It turns out that including the tip shroud significantly changes the stability prediction of the rotor blade. This is due to the fact that the amplitude of the unsteady pressure created in the inter-fin cavity, due to the motion of the airfoil, is much greater than that of the airfoil. It is concluded that the combined effect of the seal and its platform tends to stabilize the rotor blade for all the examined nodal diameters and reduced frequencies. Finally, the numerical results are shown to be consistent with those obtained using an analytical simplified model to account for the effect of the labyrinth seals.