Localization, in the sense of a more or less abrupt change from a smoothly varying deformation pattern to a pattern involving one or more regions of highly localized deformation, occurs in a wide variety of circumstances, including shear band localizations in structural metals, rocks, and concrete and localized tearing in sheet forming operations. The onset of necking in the round bar tensile test is a classic example of this type of localization. A similar observation in structural buckling is that the final buckled configuration is a localized mode in contrast to the periodic mode associated with the critical buckling load. In buckling, as in tensile necking, the basic mechanism of localization is associated with a bifurcation in the vicinity of the maximum load point. In particular, narrow cylindrical panels occur in stiffened cylindrical shells and, depending on their curvature, may or may not have a load maximum associated with deformation in the periodic buckling mode. Previously we analyzed the development of buckling pattern localization in elastic-plastic cylindrical panels subject to axial compression. The effect of residual stresses on buckling localization in cylindrical panels is now explored.