We derive a second-order semidiscrete central-upwind scheme for one- and two-dimensional systems of two-layer shallow water equations. We prove that the presented scheme is well-balanced in the sense that stationary steady-state solutions are exactly preserved by the scheme and positivity preserving; that is, the depth of each fluid layer is guaranteed to be nonnegative. We also propose a new technique for the treatment of the nonconservative products describing the momentum exchange between the layers. The performance of the proposed method is illustrated on a number of numerical examples, in which we successfully capture (quasi) steady-state solutions and propagating interfaces. © 2009 Society for Industrial and Applied Mathematics.