The influence of a transverse velocity shear on the Rayleigh-Taylor instability is investigated. It is found that a sheared velocity flow can substantially reduce the growth rate of the Rayleigh-Taylor instability in short wavelength regime (i.e., kL>1 where L is the scale length of the density inhomogeneity), and causes the growth rate to maximize at kL<1.0. Applications of this result to ionospheric phenomena [equatorial spread F (ESF) and ionospheric plasma clouds> are discussed. In particular, the effect of shear could account for, at times, the 100's of km modulation observed on the bottomside of the ESF ionosphere and the km scale size wavelengths observed in barium cloud prompt striation phenomena.