The stability of localized modes (Mercier modes) in a tokamak with a toroidally rotating plasma is analyzed within the framework of compressible, ideal magnetohydrodynamics. For equilibria with large aspect ratio, poloidal beta value of order unity, and isothermal magnetic surfaces, it is found that sonic, toroidal rotation provides a strongly stabilizing effect for the Mercier modes, similar to the stabilization recently found for the internal kink mode in a rotating plasma [Wahlberg and Bondeson, Phys. Plasmas 7, 923 (2000)]. A finite oscillation frequency (Brunt–Väisälä frequency), of the order of the sound frequency, is shown to be associated with each magnetic surface. If Γ>1, where Γ is the exponent in the equation of state, the rotation transforms the Mercier instabilities to stable oscillations at the local Brunt–Väisälä frequency associated with the magnetic surface where the mode is located. If the plasma satisfies an isothermal equation of state (Γ=1), however, the stability of the Mercier modes becomes sensitive to the profile of the toroidal flow. In this case, the rotation is found to be stabilizing if the kinetic energy density of the rotation is an increasing function of the minor radius. In the opposite case, the rotation is destabilizing unless the pressure profile is much more peaked than the kinetic energy density profile.