In this study natural convection heat transfer in a cold outer circular enclosure containing a hot inner sinusoidal cylinder is investigated numerically using the Control Volume based Finite Element Method (CVFEM). Both circular enclosure and inner cylinder are maintained at constant temperature and air filled the enclosure. The governing equations of fluid motion and heat transfer in their vorticity stream function form are used to simulate the fluid flow and heat transfer. The calculations were performed for different governing parameters such as the Rayleigh number (Ra = 103, 104, 105 and 106), values of amplitude (A = 0.1, 0.3 and 0.5) and the number of undulations of the inner cylinder (N = 2, 3, 5 and 6). The results show that streamlines, isotherms, and the number, size and formation of the cells inside the enclosure strongly depend on the Rayleigh number, values of amplitude and the number of undulations of the enclosure.