This paper focuses on the parametric instability of a functionally graded (FG) cylindrical thin shell under both axial disturbance and thermal environment. Based on Love's thin shell theory, and considering the temperature-dependent properties of FG cylindrical shell, the dynamic equations of the FG cylindrical shell are derived by Hamilton's principle. The multiple scales method is performed to obtain the instability boundaries of the shell with axial disturbance. The primary and combination instabilities of the shell are studied systematically. Moreover, numerical simulations are utilized to discuss the influences of axial disturbed amplitude, material heterogeneity and thermal effects on instability regions, frequency characteristics of the shell. Specially, some numerical results are given to illustrate the combined influence of axial disturbed amplitude and temperature variation on instability regions.