Natural convection induced by carbon dioxide (CO2) dissolution from a gas cap into the resident formation brine of a deep saline aquifer in the presence of a capillary transition zone is an important phenomenon that can accelerate the dissolution process, reducing the risk of CO2 leakage to the shallower formations. Majority of past investigations on the instability of the diffusive boundary layer assumed a sharp CO2–brine interface with constant CO2 concentration at the top of the aquifer, i.e., single-phase system. However, this assumption may lead to erroneous estimates of the onset of natural convection. The present study demonstrates the significant effect of the capillary transition zone on the onset of natural convection in a two-phase system in which a buoyant CO2 plume overlaid a water-saturated porous layer. Using the quasi-steady-state approximation (QSSA), we performed a linear stability analysis to assess critical times, critical wavenumbers, and neutral stability curves as a function of Bond number. We show that the capillary transition zone could potentially accelerate the evolution of the natural convection by sixfold. Furthermore, we characterized the instability problem for capillary-dominant, in-transition, and buoyancy-dominant systems. In the capillary-dominant systems, capillary transition zone has a strong role in destabilizing the diffusive boundary layer. In contrast, in the buoyancy-dominant systems, the buoyancy force is the sole cause of the instability, and the effect of the capillary transition zone can be ignored. Our findings provide further insight into the understanding of the natural convection in the two-phase CO2–brine system and the long-term fate of the injected CO2 in deep saline aquifers.