The study of nonlinear aeroelastic instability mechanism of nonconservative acousto-elastic system is the focus here. The acousto-elastic system consists of a spinning disc in a compressible fluid filled enclosure. The nonlinear rotating plate is coupled with the linear acoustic oscillations of the surrounding fluid. Based on the acousto-elastic theory, the coupled field equations are discretized and solved for various rotation speeds in order to obtain the coupled system dynamics. The study shows that the coupled system undergoes a flutter instability at a particular rotation speed and the instability takes the form of supercritical Hopf bifurcation. Subsequently, the effect of randomness associated with the structural and the acoustic damping parameters are quantified on the nonlinear instability behaviour by means of a spectral projection based polynomial chaos expansion technique. Copyright © 2016 by ASME.