We consider the motion of two superposed immiscible, viscous, incompressible, capillary fluids that are separated by a sharp interface which needs to be determined as part of the problem. Allowing for gravity to act on the fluids, we prove local well-posedness of the problem. In particular, we obtain well-posedness for the case where the heavy fluid lies on top of the light one, that is, for the case where the Rayleigh-Taylor instability is present. Additionally, we show that solutions become real analytic instantaneously, and we study the Rayleigh-Taylor instability.