The displacement of a shear-thinning fluid by a denser and less viscous Newtonian fluid in a vertical duct is investigated using experiments and numerical simulations. We study how shear-thinning and increased viscosity contrast between the fluids affect the displacement. Our results show that the degree of shear-thinning significantly influences the development of interfacial patterns and the growth of perturbations. In the weakly shear-thinning regime, the displacement progresses as a stable displacement with no visible instabilities. Increasing the viscosity of the displaced fluids result in a Saffman–Taylor type instability with several finger-shaped channels carved across the width of the duct. In the strongly shear-thinning regime, a unique viscous finger with an uneven interface is formed in the middle of the displaced fluid. This finger eventually breaks through at the outlet, leaving behind considerably stagnant wall layers at the duct side walls. We link the onset of viscous fingering instability to the viscosity contrast between the fluids, and the stabilizing density difference, as expressed through a modified, unperturbed pressure gradient for the two fluids. Numerical simulations are performed with both an initial flat interface, and with a perturbed interface, and we find good qualitative agreement between experimental observations and computations.