We show that the governing equations of the classical two-fluid interaction and the incompressible fluid system are PT-symmetric, and the well-known Kelvin-Helmholtz instability is the result of spontaneous PT-symmetry breaking. Specifically, it is shown that the boundaries between the eigenmodes with different Krein signatures. In terms of physics, this rigorously implies that the system is destabilized when a positive-action mode resonates with a negative-action mode, and that this is the only mechanism by which the system can be destabilized. It is anticipated that this physical mechanism of destabilization is valid for other collective instabilities in conservative systems in plasma physics, accelerator physics, and fluid dynamics systems.