This paper studies the dynamic stability of a positively buoyant Autonomous Underwater Vehicle (AUV) in vertical plane for a level flight. Dynamic stability of underwater vehicles is estimated by using the linearized equations of motion about an equilibrium position. AUV is a slow moving and positively buoyant vehicle that enhances the stabilizing effect of the restoring forces. Hence a more general approach is required for the evaluation of stability. A 3 dof model for trajectory simulation for level depth trajectories is used to study the effect of positive buoyancy on vehicle trajectory at different speeds. The relative importance of the damping, restoring and control forces acting on the vehicle is established. The stability analysis is undertaken using linearized equations of motion considering the nonlinearities due to positive buoyancy. Numerical studies are carried out to estimate the fixed points of the system and eigenvalues at different forward speeds, metacentric heights and positive buoyancy for a level depth. The study shows that the stability changes from oscillatory to a steady node at a transition speed that depends on the metacentric height. The positive buoyancy has marginal effect on the transition speed but influences the sternplane angles and pitch of the vehicle. © 2017 Elsevier Ltd